FIRM CHARACTERISTICS AND FINANCIAL DISTRESS OF LISTED SERVICES COMPANIES IN NIGERIA

Abstract

This study investigated the effect of firm characteristics on financial distress of listed services companies in Nigeria. The specific objectives of this study were to investigate the effect of assets tangibility, liquidity, financial leverage and   operating capacity on Springate S Score of listed services companies in Nigeria. The study adopted Ex-post facto research design. The population of study consisted of twenty-one (21) listed services companies and it was sampled to eleven (11) using purposive sampling technique in selecting eleven (11) due to availability and completeness of data for the period under study. A cross sectional panel secondary data covering the period of ten years (2014-2023) was extracted from the audited financial statement of eleven (11) services companies  listed on the floor of Nigerian  exchange group. The method of data analysis was Descriptive Statistics, Augmented Dickey Fuller (ADF), Unit Roots Tests, VAR Lag Order Selection Criteria, Co-Integration, Autoregressive Distributed Lag (ARDL) model, Residual Diagnostic Tests, Wald Test with the help of E-view v10. The findings demonstrate that assets tangibility has positive and significant effect on Springate S-score financial distress of listed services companies in Nigeria in the long run, but in term of short run, assets tangibility has negative and insignificant effect on Springate S-score financial distress of listed services companies in Nigeria. Liquidity has positive and significant effect on Springate S-score financial distress of listed services companies in Nigeria in the long run, but in term of short run, assets tangibility has negative and insignificant effect on Springate S-score financial distress of listed services companies in Nigeria. Financial leverage has negative and insignificant effect on Springate S-score financial distress of listed services companies in Nigeria in the long run, but in term of short run, financial leverage has positive but insignificantly affect on Springate S-score financial distress of listed services companies in Nigeria. Operating capacity has negative but significantly affect on Springate S-score financial distress of listed services companies in Nigeria in the long run, but in term of short run, operating capacity has positive but insignificantly affect on Springate S-score financial distress of listed services companies in Nigeria. According to the empirical findings, this study generally concluded that there is significant effect of firm characteristics on financial distress of listed services companies in Nigeria from 2014 to 2023 in the long run while there is an insignificant effect of firm characteristics on financial distress of listed services companies in Nigeria from 2014 to 2023 in the short run. The study recommended amongst others that Firms should adopt strategic financial management practices aimed at increasing assets tangibility, such as effective cost management, revenue diversification, and operational efficiency in order to reduce financial distress.