Leases Financing, Liquidity, and Return on Equity of Selected Manufacturing Companies in Nigeria: Implication of IFRS 16 Leases

Shiyanbola Trimisiu Tunji; Desi Augustine; Oyedele Philips Olabode; Oyewumi Solomon

doi:doi:10.11648/j.ijafrm.20220702.17

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Leases Financing, Liquidity, and Return on Equity of Selected Manufacturing Companies in Nigeria: Implication of IFRS 16 Leases

Shiyanbola Trimisiu Tunji, Desi Augustine, Oyedele Philips Olabode, Oyewumi Solomon

Published in International Journal of Accounting, Finance and Risk Management (Volume 7, Issue 2)

Received: 4 June 2022 Accepted: 17 June 2022 Published: 27 June 2022

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Abstract

The new IFRS 16 standards, which replaced IAS 17, have brought changes affecting primarily leases, and while the lessor's accounting remains largely unchanged, this could result in changes in companies' investment decision options. Studies have argued that the new IFRS 16 has come with complexities affecting the financial and off-statement of financial position events. However, the extent of the effect on corporate return on equity, especially for manufacturing companies, remains unclear. As a result, the impact of lease financing and liquidity on the return on equity of selected listed manufacturing companies in Nigeria was investigated in this study. Secondary data was acquired from a population of 66 manufacturing organizations using an Expo facto research design. 10 companies were purposefully chosen and listed over a 10-year period from 2011 to 2020. The data was analyzed using descriptive and inferential statistics. Lease finance and liquidity were found to have a beneficial impact on return on equity (Adj.R² = 0.064; F_{(4, 95)} = 18.57; p-value = 0.05). In introducing firm size as a controlling variable, the study revealed that firm size, leases financing and liquidity had a stronger positive effect on return on equity, (Adj.R² = 0.121; F_{(5, 94)} = 28.29; p-value < 0.05). The study concluded that leasing and liquidity had a beneficial impact on the return on equity of selected Nigerian listed manufacturing enterprises. The study recommended that managers show competence when making lease finance and liquidity decisions because poor decisions could jeopardize the attainment of corporate goals and objectives.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 7, Issue 2)
DOI	10.11648/j.ijafrm.20220702.17
Page(s)	77-85
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Firm Size, IFRS 16 Leases, Leases Financing, Leases Expenses, Liquidity, Operating Expenses, Return in Equity

References

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APA Style

Shiyanbola Trimisiu Tunji, Desi Augustine, Oyedele Philips Olabode, Oyewumi Solomon. (2022). Leases Financing, Liquidity, and Return on Equity of Selected Manufacturing Companies in Nigeria: Implication of IFRS 16 Leases. International Journal of Accounting, Finance and Risk Management, 7(2), 77-85. https://doi.org/10.11648/j.ijafrm.20220702.17

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ACS Style

Shiyanbola Trimisiu Tunji; Desi Augustine; Oyedele Philips Olabode; Oyewumi Solomon. Leases Financing, Liquidity, and Return on Equity of Selected Manufacturing Companies in Nigeria: Implication of IFRS 16 Leases. Int. J. Account. Finance Risk Manag. 2022, 7(2), 77-85. doi: 10.11648/j.ijafrm.20220702.17

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AMA Style

Shiyanbola Trimisiu Tunji, Desi Augustine, Oyedele Philips Olabode, Oyewumi Solomon. Leases Financing, Liquidity, and Return on Equity of Selected Manufacturing Companies in Nigeria: Implication of IFRS 16 Leases. Int J Account Finance Risk Manag. 2022;7(2):77-85. doi: 10.11648/j.ijafrm.20220702.17

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@article{10.11648/j.ijafrm.20220702.17,
  author = {Shiyanbola Trimisiu Tunji and Desi Augustine and Oyedele Philips Olabode and Oyewumi Solomon},
  title = {Leases Financing, Liquidity, and Return on Equity of Selected Manufacturing Companies in Nigeria: Implication of IFRS 16 Leases},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {7},
  number = {2},
  pages = {77-85},
  doi = {10.11648/j.ijafrm.20220702.17},
  url = {https://doi.org/10.11648/j.ijafrm.20220702.17},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20220702.17},
  abstract = {The new IFRS 16 standards, which replaced IAS 17, have brought changes affecting primarily leases, and while the lessor's accounting remains largely unchanged, this could result in changes in companies' investment decision options. Studies have argued that the new IFRS 16 has come with complexities affecting the financial and off-statement of financial position events. However, the extent of the effect on corporate return on equity, especially for manufacturing companies, remains unclear. As a result, the impact of lease financing and liquidity on the return on equity of selected listed manufacturing companies in Nigeria was investigated in this study. Secondary data was acquired from a population of 66 manufacturing organizations using an Expo facto research design. 10 companies were purposefully chosen and listed over a 10-year period from 2011 to 2020. The data was analyzed using descriptive and inferential statistics. Lease finance and liquidity were found to have a beneficial impact on return on equity (Adj.R2 = 0.064; F(4, 95) = 18.57; p-value = 0.05). In introducing firm size as a controlling variable, the study revealed that firm size, leases financing and liquidity had a stronger positive effect on return on equity, (Adj.R2 = 0.121; F(5, 94) = 28.29; p-value < 0.05). The study concluded that leasing and liquidity had a beneficial impact on the return on equity of selected Nigerian listed manufacturing enterprises. The study recommended that managers show competence when making lease finance and liquidity decisions because poor decisions could jeopardize the attainment of corporate goals and objectives.},
 year = {2022}
}

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TY  - JOUR
T1  - Leases Financing, Liquidity, and Return on Equity of Selected Manufacturing Companies in Nigeria: Implication of IFRS 16 Leases
AU  - Shiyanbola Trimisiu Tunji
AU  - Desi Augustine
AU  - Oyedele Philips Olabode
AU  - Oyewumi Solomon
Y1  - 2022/06/27
PY  - 2022
N1  - https://doi.org/10.11648/j.ijafrm.20220702.17
DO  - 10.11648/j.ijafrm.20220702.17
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 77
EP  - 85
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20220702.17
AB  - The new IFRS 16 standards, which replaced IAS 17, have brought changes affecting primarily leases, and while the lessor's accounting remains largely unchanged, this could result in changes in companies' investment decision options. Studies have argued that the new IFRS 16 has come with complexities affecting the financial and off-statement of financial position events. However, the extent of the effect on corporate return on equity, especially for manufacturing companies, remains unclear. As a result, the impact of lease financing and liquidity on the return on equity of selected listed manufacturing companies in Nigeria was investigated in this study. Secondary data was acquired from a population of 66 manufacturing organizations using an Expo facto research design. 10 companies were purposefully chosen and listed over a 10-year period from 2011 to 2020. The data was analyzed using descriptive and inferential statistics. Lease finance and liquidity were found to have a beneficial impact on return on equity (Adj.R2 = 0.064; F(4, 95) = 18.57; p-value = 0.05). In introducing firm size as a controlling variable, the study revealed that firm size, leases financing and liquidity had a stronger positive effect on return on equity, (Adj.R2 = 0.121; F(5, 94) = 28.29; p-value < 0.05). The study concluded that leasing and liquidity had a beneficial impact on the return on equity of selected Nigerian listed manufacturing enterprises. The study recommended that managers show competence when making lease finance and liquidity decisions because poor decisions could jeopardize the attainment of corporate goals and objectives.
VL  - 7
IS  - 2
ER  -

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Author Information

Shiyanbola Trimisiu Tunji

Department of Accounting, Babcock University, Ilishan-Remo, Nigeria
Desi Augustine

Department of Accounting, Babcock University, Ilishan-Remo, Nigeria
Oyedele Philips Olabode

Department of Accounting, Babcock University, Ilishan-Remo, Nigeria
Oyewumi Solomon

Department of Accounting, Babcock University, Ilishan-Remo, Nigeria

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Shiyanbola Trimisiu Tunji, Desi Augustine, Oyedele Philips Olabode, Oyewumi Solomon. (2022). Leases Financing, Liquidity, and Return on Equity of Selected Manufacturing Companies in Nigeria: Implication of IFRS 16 Leases. International Journal of Accounting, Finance and Risk Management, 7(2), 77-85. https://doi.org/10.11648/j.ijafrm.20220702.17

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ACS Style

Shiyanbola Trimisiu Tunji; Desi Augustine; Oyedele Philips Olabode; Oyewumi Solomon. Leases Financing, Liquidity, and Return on Equity of Selected Manufacturing Companies in Nigeria: Implication of IFRS 16 Leases. Int. J. Account. Finance Risk Manag. 2022, 7(2), 77-85. doi: 10.11648/j.ijafrm.20220702.17

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AMA Style

Shiyanbola Trimisiu Tunji, Desi Augustine, Oyedele Philips Olabode, Oyewumi Solomon. Leases Financing, Liquidity, and Return on Equity of Selected Manufacturing Companies in Nigeria: Implication of IFRS 16 Leases. Int J Account Finance Risk Manag. 2022;7(2):77-85. doi: 10.11648/j.ijafrm.20220702.17

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@article{10.11648/j.ijafrm.20220702.17,
  author = {Shiyanbola Trimisiu Tunji and Desi Augustine and Oyedele Philips Olabode and Oyewumi Solomon},
  title = {Leases Financing, Liquidity, and Return on Equity of Selected Manufacturing Companies in Nigeria: Implication of IFRS 16 Leases},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {7},
  number = {2},
  pages = {77-85},
  doi = {10.11648/j.ijafrm.20220702.17},
  url = {https://doi.org/10.11648/j.ijafrm.20220702.17},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20220702.17},
  abstract = {The new IFRS 16 standards, which replaced IAS 17, have brought changes affecting primarily leases, and while the lessor's accounting remains largely unchanged, this could result in changes in companies' investment decision options. Studies have argued that the new IFRS 16 has come with complexities affecting the financial and off-statement of financial position events. However, the extent of the effect on corporate return on equity, especially for manufacturing companies, remains unclear. As a result, the impact of lease financing and liquidity on the return on equity of selected listed manufacturing companies in Nigeria was investigated in this study. Secondary data was acquired from a population of 66 manufacturing organizations using an Expo facto research design. 10 companies were purposefully chosen and listed over a 10-year period from 2011 to 2020. The data was analyzed using descriptive and inferential statistics. Lease finance and liquidity were found to have a beneficial impact on return on equity (Adj.R2 = 0.064; F(4, 95) = 18.57; p-value = 0.05). In introducing firm size as a controlling variable, the study revealed that firm size, leases financing and liquidity had a stronger positive effect on return on equity, (Adj.R2 = 0.121; F(5, 94) = 28.29; p-value < 0.05). The study concluded that leasing and liquidity had a beneficial impact on the return on equity of selected Nigerian listed manufacturing enterprises. The study recommended that managers show competence when making lease finance and liquidity decisions because poor decisions could jeopardize the attainment of corporate goals and objectives.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - Leases Financing, Liquidity, and Return on Equity of Selected Manufacturing Companies in Nigeria: Implication of IFRS 16 Leases
AU  - Shiyanbola Trimisiu Tunji
AU  - Desi Augustine
AU  - Oyedele Philips Olabode
AU  - Oyewumi Solomon
Y1  - 2022/06/27
PY  - 2022
N1  - https://doi.org/10.11648/j.ijafrm.20220702.17
DO  - 10.11648/j.ijafrm.20220702.17
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 77
EP  - 85
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20220702.17
AB  - The new IFRS 16 standards, which replaced IAS 17, have brought changes affecting primarily leases, and while the lessor's accounting remains largely unchanged, this could result in changes in companies' investment decision options. Studies have argued that the new IFRS 16 has come with complexities affecting the financial and off-statement of financial position events. However, the extent of the effect on corporate return on equity, especially for manufacturing companies, remains unclear. As a result, the impact of lease financing and liquidity on the return on equity of selected listed manufacturing companies in Nigeria was investigated in this study. Secondary data was acquired from a population of 66 manufacturing organizations using an Expo facto research design. 10 companies were purposefully chosen and listed over a 10-year period from 2011 to 2020. The data was analyzed using descriptive and inferential statistics. Lease finance and liquidity were found to have a beneficial impact on return on equity (Adj.R2 = 0.064; F(4, 95) = 18.57; p-value = 0.05). In introducing firm size as a controlling variable, the study revealed that firm size, leases financing and liquidity had a stronger positive effect on return on equity, (Adj.R2 = 0.121; F(5, 94) = 28.29; p-value < 0.05). The study concluded that leasing and liquidity had a beneficial impact on the return on equity of selected Nigerian listed manufacturing enterprises. The study recommended that managers show competence when making lease finance and liquidity decisions because poor decisions could jeopardize the attainment of corporate goals and objectives.
VL  - 7
IS  - 2
ER  -

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