RISK MANAGEMENT PRACTICE AND FIRM VALUE OF FIRMS LISTED ON NIGERIAN EXCHANGE GROUP
Abstract
This study investigated the impact of risk management practices on the firm value of
companies listed on the Nigerian Exchange Group (NGX) between 2015 and 2024. Using
an ex post facto design, panel data from 30 purposively selected firms (300 firm-year
observations) were analyzed with descriptive statistics, correlation and regression models.
Descriptive results showed an average liquidity ratio of 0.54, a mean profit margin of 0.07,
a debt-to-equity ratio of 2.11, and an average market share price of #28.18. regression
analysis revealed that liquidity risk management had no significant effect on firm value
( = 3.62, p> 0.36). Operational efficiency risk management had a positive and highly
significant effect ( = 21.80, < 0.01), indicating that firms with stronger operational
efficiency enjoy higher market valuations. Leverage risk management showed a negative
and significant effect ( = −1.52, < 0.05), highlighting the detrimental impact of
excessive debt. The model explained about 6.5% of the variation in firm value (Adj. 2=
0.065). The study concludes that operational efficiency is the key driver of firm value,
while excessive leverage erodes market performance. It recommends the adoption holistic
enterprise risk management frameworks, prudent leverage policies, and improved
operational controls to sustain long-term value creation.
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