Financial Performance Determinants at the Nigerian Oil and Gas Sector

Abstract

The study was conducted to examine financial performance determinants at the Oil and Gas sector in Nigeria using listed oil and gas companies. This Investigation is premise on the assertion that the higher the financial performance indicator the better firms will perform, hence the need to confirm the assertion at the Oil and Gas sector which is the anchor of the Nigerian economy. Ex-post facto research design was adopted involving the use of data extracted from published annual account of the sampled oil and gas companies for the period 2012-2018. Data collected were analyzed using descriptive and inferential statistical techniques involving correlation analysis, R-square, adjusted R 2 , t-statistic, Durbin-Watson (DW) statistic, F-ratio and P-value obtained through multiple regression analysis at 5% level of significance. The variables of study were Return on Assets (ROA) for financial performance, capital structure (CAS), liquidity (LQ), Size (SZ), Age (AG), Sales Revenue Growth (SRG), Profit Margin (PM) and Tangibility (TAN) as internal variables, and the inflation rate (IFR) and Growth rate of Real Gross Domestic Product (RGDP) as external variables. Result shows four (4) variables CAS (=0.2998; P-value <0.05); SZ ( =0.266, P-value <0.05); AG ( =0.267, P-value <0.05) and PM ( =0.758, P-value <0.05) were statistically significant in the model. R 2 value of 82.7% explains the variation in ROA is caused by the internal and external variables of the study. It was recommended that the liquidity of the Oil and Gas companies should be effectively managed by the reduction of excessive current assets as well as disposing of some tangible assets without adversely affecting operations and acquisition of debt instrument such as the debenture instrument.