Business Risk,Industry Affiliation,and Corporate Capital Structure: Evidence From Publicly Listed Nigerian Companies

This study demonstrates the extent to which changes in business risk help predict the capital structure choices of Nigerian listed companies. The findings support a U-shaped function with leverage ratio decreasing with earnings volatility, but only up to a cut-off point of 32% per annum. The results are consistent with agency cost models, which predict an escalation in the conflicts between shareholders and firm managers beyond a certain level of volatility with a subsequent increase in the equity risk premium. The expected rise in the cost of equity capital gives debt priority and helps avoid potential underinvestment.     

Determinants of Working Capital Requirements in Selected Quoted Companies in Nigeria

In this article, the author investigates the determinants of working capital requirements of 66 firms in Nigeria using panel data for the period 1997–2007. The results suggest that sales growth, firms’ operating cycle, economic activity, size, and permanent working capital are firm specific characteristics that positively drive working capital policy. Leverage, however, is inversely related to working capital requirements. Essentially, the results imply that traditional valuation methods used to quantify the efficiency of corporate working capital policy may be suspect as increased investments in operating working capital may be necessitated by increased business uncertainties. In general, the findings suggest that some of the insights from modern finance theory are potable to Nigeria.     

Modelling spillovers between stock market and FX market: evidence for Nigeria

Abstract

The need to capture the foreign exchange (FX) and stock markets nexus in Nigeria is underscored by the rapidly expanding financial markets integration due to trade and financial liberalization policies which seem to have enhanced the inflow of capital as well as accelerated investment/business interactions. Using variants of the VARMA-AMGARCH model of McAleer, Hoti, and Chan (2009), we find that volatility persistence in the stock market is accentuated by bad news in the market and moderated by good news in the FX market. Finally, we establish that ignoring the asymmetric effects may exaggerate the spillover results.     

The Role of Information Security Development （ISD） in Effective Information Security Management （ISM） Implementation in the Banks： A Nigerian Case

This research discusses the role of information security development （ISD） using organizational factors such as information security plans, information security awareness, perceived quality training programs, information security policies and procedures, and organizational culture in effective information security management （ISM） implementation in the banks （a Nigerian case）. This paper explores the existing literature and a proposed framework that consists of ISD such as information security plans, information security awareness, perceived quality training programs, information security policies and procedures, and organizational culture in ISM implementation. ISD factors are found to be statistically significant, because it motivates an organization to implement effective ISM in the banks. Hence, it could be said that the role of ISD practices in an effective implementation of ISM among banks in Nigeria will be of great value.     

Risks and farmers’ investment in productive assets in Nigeria

The majority of farmers in sub‐Saharan Africa (SSA) lack the means to mitigate the impact of risks associated with rainfall and commodity prices due to capital constraints and the imperfect insurance market in these countries. Because most SSA farmers are risk averse, they may be willing to invest in productive assets that can mitigate the impacts of such risks if their capital constraints are relaxed through external financial assistance. We test this hypothesis by using panel data on investment behavior of Nigerian farmers who received financial assistance on productive assets. The empirical results show that farmers facing higher rainfall risks are more likely to invest in irrigation pumps that can mitigate the impact of rainfall risks, while those facing higher risks of white gari price are more likely to invest in milling machines that enable them to process cassava into flour instead of gari, which supports our hypothesis.     

Knowledge transfer in collaborations between foreign and indigenous firms in the Nigerian oil industry: The role of partners' motivational characteristics

Previous empirical studies on determinants of interfirm knowledge transfer have been largely focused on knowledge transfer between symmetrical partners, where there are relatively similar levels of knowledge sophistication and complementary knowledge‐transfer motives. Determinants of knowledge transfer between partners in asymmetric “market‐exploitation” alliances, where there are large differences in capabilities, and in motives, of the collaborating partners, have been understudied. This article presents a qualitative case study‐research of knowledge transfer in such collaborations in the Nigerian oil industry. Four cases of interfirm collaborative arrangements between foreign and local indigenous firms in the industry were studied and analyzed. Based on the results of the case study research, this article highlights the dominant role of partners' motivational characteristics, as against, their cognitive characteristics in the knowledge‐transfer process of asymmetric market‐exploitation alliances. It develops a set of theoretical propositions to expand the understanding of the key determinants of learning and knowledge transfer.     

Descending the energy ladder? Oil price shocks and domestic fuel choices in Kano,Nigeria

In recent years, the densely populated region around the burgeoning city of Kano in northern Nigeria has been the focus of much academic enquiry into the links between vegetation modification and fuelwood production and consumption. While many scholars have praised the socio-economic and ecological sustainability of Kano's rural–urban interface, arguing that indigenous agro-forestry systems will continue to resist urban fuelwood pressures for many years to come, other less optimistic observers have warned that exposure to a rapidly changing world economy is challenging traditional resource management systems like never before. Focusing on the case of Kano and its resource hinterlands, recent field-based evidence presented in this paper suggests that the latter supposition may be gaining increasing currency. In peri-urban regions, the rising prices of kerosene and other petroleum-based domestic fuels, coupled with the economic knock-on effects of a current petro-boom, are making fuelwood a much more attractive alternative as a domestic fuel choice. As lower and middle-income households shift away from commercial petroleum-based energy sources in favour of cheaper and more readily available biomass alternatives, it may be placing increased pressure on woodland resources and Kano's surrounding rural ecology: in the hinterlands of the city, local perceptions of research informants suggest that deteriorating economic conditions have driven some individuals to ‘step up’ fuelwood production to meet rising peri-urban demands. Although the intention of the paper is not to perpetuate crisis narratives or to suggest that fuelwood demand is causing runaway deforestation, the evidence presented does suggest that as conventional fuels become progressively more expensive, the poorest and most disadvantaged households may find it increasingly challenging to meet their basic energy needs.     

Information and consumer willingness to pay for biofortified yellow cassava: evidence from experimental auctions in Nigeria

In this article, we use the Becker‐DeGroot‐Marschak mechanism to estimate consumer demand for biofortified yellow cassava varieties in two states of Nigeria: Imo in the southeast and Oyo in the southwest. These two states exhibit distinct habitual product color preferences for staple food made with cassava. We estimate the effect of nutrition information campaigns and nature of planting material delivery institutions on consumer demand. Willingness to pay estimations account for the effect of product endowment, censoring in bids and nonpayment. In Oyo, consumers are willing to pay a premium for light yellow cassava variety even in the absence of nutrition information. The article finds that nutrition information results in a large and significant price premium for biofortified cassava in both states, and the nature of delivery institution has no significant effect.     

Price Transmission in Nigerian Food Security Crop Markets

This paper comprehensively examines price transmission from world, neighbour country, and internal commercial hub markets to Nigerian urban markets, as well as from urban to rural markets within the country, for seven key food security crops (maize, millet, sorghum, rice, cassava, yams and cowpeas). There are three key findings: (i) tradability matters for price transmission, but tradability varies across crops and regions. The strongest international linkages are with neighbouring countries. Rice price transmission is high across all markets, while coarse grain price correspondence is low with world prices but high with neighbour country market prices; (ii) our results imply that local conditions matter for price transmission, and are relatively more important than trade for some crops (e.g. yams, cassava) than others (e.g. imported rice, maize); (iii) larger than expected long‐run price transmission parameters in world and neighbour countries for rice and coarse grains suggest that, in these select markets, there are either large transactions costs or quality premiums that vary systematically with border prices, and/or mark‐ups captured by traders with market power.     

The politics of the forest frontier: Negotiating between conservation,development, and indigenous rights in Cross River State,Nigeria

Nigeria's once thriving plantation economy has suffered under decades of state neglect and political and civil turmoil. Since Nigeria's return to civilian rule in 1999, in a bid to modernize its ailing agricultural economy, most of its defunct plantations were privatized and large new areas of land were allocated to ‘high-capacity’ agricultural investors. This paper explores the local tensions associated with this policy shift in Cross River State, which, due to its favorable agro-ecological conditions and investment climate, has become one of Nigeria's premier agricultural investment destinations. It shows how the state's increasing reliance on the private sector as an impetus for rural transformation is, paradoxically, crowding out smallholder production systems and creating new avenues for rent capture by political and customary elites. Moreover, as Nigeria's most biodiverse and forested state, the rapid expansion of the agricultural frontier into forest buffer zones is threatening to undermine many of the state's conservation initiatives and valuable common pool resources. The paper goes on to explain why and how private sector interests in Cross River State are increasingly being prioritized over natural resource protection, indigenous rights over the commons, and smallholder production systems.