Impact of firm size, firm age on the profitability of listed consumer goods firms in Nigeria

Abstract

Purpose: This study investigates the impact of firm size and firm age on the profitability of listed consumer goods firms in Nigeria.

Methodology: The study utilizes panel data covering 13 years (2010–2022) obtained from the annual reports of consumer goods firms listed on the Nigerian Exchange Group and employs regression analysis to examine the effects of Firm Size (FS) and Firm Age (FA) on profitability measured by Return on Equity (ROE) and Return on Assets (ROA).

Results and conclusion: The regression results show that the overall model is statistically significant for ROE but not significant for ROA, while firm Size does not exhibit a statistically significant relationship with profitability; firm age demonstrates a statistically significant negative relationship.

Implication of findings: It indicates that older firms tend to experience lower profitability, possibly due to rigidity and reduced adaptive capacity over time. The findings imply that stakeholders should not rely solely on firm size and age in assessing profitability but should also consider operational efficiency, industry dynamics, management effectiveness, capital structure, financial ratios, and prevailing market conditions, while future studies are encouraged to incorporate broader variables and larger samples to generate more comprehensive insights.