EFFECT OF PORTFOLIO MANAGEMENT ON THE FINANCIAL PERFORMANCE OF LISTED INDUSTRIAL FIRMS IN NIGERIA

Abstract

This study investigates the effect of portfolio management on the profitability of listed industrial firms in Nigeria from 2019 to 2023. Anchored on Shiftability and Resource-Based Theory, which highlights the adaptability of financial strategies in response to shifting economic conditions and effect on firm performance, the research employs an Ex-Post Facto design to analyze the relationship between portfolio management practices and financial performance using historical data. Data were collected from annual reports of prominent industrial firms including Dangote Cement Nigeria Plc, Lafarge Cement Nigeria Plc., BUA Cement Plc, and Berger Paints Nigeria Plc. The fixed effect panel regression analysis was utilized to assess the effects of various portfolio management components on profitability. The findings reveal that credit risk management, liquidity risk management, and asset management have no significant impact on the financial performance of these firms. Based on these results, the study recommends that industrial firms refine their portfolio management strategies to better align with their financial goals and consider context-specific risk management approaches. Additionally, further exploration into other influencing factors is suggested to optimize financial outcomes in varying industrial environments.