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FIRM SPECIFIC CHARACTERISTICS AND FINANCIAL PERFORMANCE OF LISTED INSURANCE FIRMS IN NIGERIA
Abstract:
Firm specific characteristics have been identified to have an immeasurable role in enhancing the financial performance of companies, but available literatures in this area are mixed and inconclusive. Owing to these mixed and inconclusive findings, the study therefore investigates the impact of firm specific characteristics on the financial performance of listed insurance firms in Nigeria. Financial performance is the dependent variable while age if insurance company, firm size, premium growth, loss ratio, liquidity and leverage are independent variables. The population of the study consists of thirty (30) listed insurance firms as at 31st December 2013. Twelve of the listed insurance firms are selected to form the sample of the study for the period of eight years (2006-2013). The study employed multiple regressions as tool for analysis. Secondary data obtained from the financial statements of the companies were analyzed. Panel data techniques (fixed and random effects model) were utilized to investigate the impact of firm specific characteristics on financial performance and Hausman specification confirmed that random effect model is more appropriate. The result shows that firm size, loss ratio, liquidity, and leverage are the most important determinants of financial performance. Hence, firm size, loss ratio and leverage are negatively related. In contrast, liquidity ratio is positively and significantly related with financial performance. Lastly, age of insurance company and premium growth are not significantly related with financial performance of listed insurance firms in Nigeria. For insurance companies to achieve a greater profit and competitiveness in the market, it is therefore recommended that the companies should conduct careful evaluation and take into consideration firm specific characteristics (firm size, loss ratio, liquidity and leverage) that influence the financial performance of the company before making major business decision as this will go a long way in improving their financial performance.
FIRM SPECIFIC CHARACTERISTICS AND FINANCIAL PERFORMANCE OF LISTED INSURANCE FIRMS IN NIGERIA
