Working Capital Finance and Entrepreneurship Business Growth in Nigeria

114 Pages Posted: 5 Nov 2016

See all articles by Prof. Godwin Emmanuel Oyedokun

Prof. Godwin Emmanuel Oyedokun

Lead City University Ibadan Nigeria ; OGE Professional Services Ltd; Nasarawa State University, Keffi

Date Written: April 30, 2016

Abstract

Entrepreneurship process represents a growth-oriented outlook where great leaders are born from. Out of those ideas, there is a need to provide finance for the vehicle of the idea working capital. Working capital finance is concern about the issues affecting day-to-day management and finance of the business. This study was conducted to empirically investigate the effect of working capital finance on the entrepreneurship business growth in Nigeria.

This study employed ex-post facto research design using panel data analyses of financial information extracted from Financial Statements for the years 2010 to 2014 of 10 companies listed under “consumer goods” on the floor of Nigeria Stock Exchange. In order to arrive at the testable conclusion, stratified and purposive random sampling technique were adopted. Of all the industry sectors, only companies under “Consumer Goods” sub-sector were considered in this study while others were excluded. This is because companies operating under “Consumer Goods” sub-sector have some characteristics of entrepreneurship business. These financial statements were considered valid and reliable for this study as they are all audited Independent Auditors and the sample of 10 with 50 observations is considered suitable for the study. Simple and multiple regression analysis were employed in this research work with the model EBGN = α5 β5 IM β6 RM β7 PM β8 CM µ5, this type of test can only be carried out when there is a need to establish the linear relationship between two or more variables and to establish the strength of their relationships.

This study concludes and established that there is a significant positive relationship between entrepreneurship business growth, inventory management, payable management, receivable management and cash management (EBGN = 15.49554 0.020335IM 0.007636RM 0.015289PM 0.017931CM µ5). The study also reveals that Inventory management exacts a positive but non-significant effect on Entrepreneurship Business Growth with a coefficient (β1) of 0.020335, Payable Management exacts a positive but non-significant effect on Business Growth with a coefficient (β2) of 0.020335, Receivable management exacts a positive but non-significant effect on Entrepreneurship Business Growth with a coefficient (β3) of 0.007636 and finally it was also reveal that cash management have a positive effect on Business Growth with a coefficient (β1) of 0.017931. This is also evident as the computed output of multiple regression which demonstrates that R2 =.399, Adjusted R2 = .327 and F-statistic = 2.797319.

This study recommends that managers, entrepreneurs, and business stakeholders should utilize the findings of this study while taking business decision with respect to the efficient management of all components of working capital in term of optimum financing in order to grow their businesses. Government, banks, regulators and relevant supervisory bodies are advised to take regulation and funding of Entrepreneurship Businesses in Nigeria seriously in order to bring about a sustained economic growth and economic development. The models formulated and tested in this research work has a good fit which can be used for forecasting Entrepreneurship Business growth of manufacturing companies.

Keywords: Working Capital Finance, Entrepreneurship, Small Scale and Medium Scale Enterprise, Business, Growth

JEL Classification: M41, M47, M49

Suggested Citation

Oyedokun, Godwin Emmanuel, Working Capital Finance and Entrepreneurship Business Growth in Nigeria (April 30, 2016). Available at SSRN: https://ssrn.com/abstract=2861595 or http://dx.doi.org/10.2139/ssrn.2861595

Godwin Emmanuel Oyedokun (Contact Author)

Lead City University Ibadan Nigeria ( email )

Ibadan
Nigeria
+2348033737184 (Phone)

HOME PAGE: http://www.oyedokungodwin.com

OGE Professional Services Ltd ( email )

2nd Floor, Back Wing, 28, Adeyemi Street, Off LUT
Mushin, Lagos
Nigeria

Nasarawa State University, Keffi ( email )

Department of Accounting
Faculty of Administration
Keffi, Nasarawa 234
Nigeria
+23480833737184 (Phone)

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