IKE, Ndubuisi Ogbonnaya Rogers1 SUKA Lenu Charles Adamgbo, Ph.D2
12Department of Finance, Faculty of Administration and Management, Rivers State University
Nkpolu-Oroworukwo, PMB 5080, Port Harcourt, Nigeria
Email: ndubuisiike@yahoo.com, adamgbo.suka@ust.edu.ng
Abstract
The study examines the effect of the marginal efficiency of capital theory on the asset value of quoted foods and beverages manufacturing firms in Nigeria. the parameters of the marginal Efficiency of Capital or Keynesian Investment Principles were Proxied by MRR, CC, ML, MMR and CF as our independent variables, while Asset Value of the quoted manufacturing firms represent our dependent variable. The study relied on panel time series data computed by the Nigeria Exchange Group Limited on twenty-one (21) foods and beverages manufacturing companies quoted in the Nigeria Exchange Group Limited. The data explored in this study covered between 2012 to 2021. The adopted expo-factor research design suitable for estimating cause and effect relationships, using the regressional estimating technique. Evidence from our findings indicated that there is aa significant statistical short and long-run relationship between Keynesian principles of investment decision of the firm and expected reward and asset value of quoted foods and beverages firms in Nigeria. Specifically, results indicated that MRR and ML correlated negatively with asset value while CC, CF and MMR correlated positively with asset value of our studied firms in Nigeria. Based on evidence before us, we conclude that the theory of marginal efficiency of capital which emphasized that investment decisions of firms is contingent on perceived expected returns has a strong influence on firms’ asset value. Hence, we recommend among others that firms should actively manage their cost of capital and investments to increase the scale of their business with positive impact on asset value-achievable by managing their assets, capital and capital structure effectively, we also consider that if firms hardwired their business plans, have a robust management system, institutionalization of appropriate financial controls and strong financial and operational performances reputation of the firms will attract investors and the asset value will be enhanced through positive investors’ perception etc.
Key Words: Keynesian investment nexus, asset value, market rate of return, marginal efficiency of capital etc.