Effect of income diversification on the financial performance of quoted manufacturing firms in Nigeria

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Published Dec 8, 2020
Umar Gunu Suleiman Umar Gunu


Corporate diversification is a center of research in strategic management and finance. Many firms are experiencing a decline in their traditional activities' dues to environmental challenges, including competition, inadequate infrastructural facilities, and economic instability. The study examines the effect of income diversification on the financial performance of quoted manufacturing firms in Nigeria. Specifically, it determines the impact of product income segment diversification and non-product income segment diversification on quoted manufacturing firms' financial performance in Nigerian. The study adopted an ex-post facto research design using secondary data of 42 firms from the 63 quoted manufacturing firms in Nigeria for 11 years (2007-2017) period. Structural equation modeling (SEM) is utilized for data analysis. The study found that both product income segment diversification and non-product income segment diversification significantly affect the financial performance (ROA and ROCE variables) of quoted manufacturing firms in Nigeria. The study concluded that quoted manufacturing firms' financial performance in Nigeria is significantly affected by product income segment diversification and non-product income diversification. The study recommended that manufacturing firms should strategically diversified to increase their income generation in both the product segment and non-product segment to improve their financial performance.

How to Cite

Gunu Suleiman, U. ., & Gunu, U. (2020). Effect of income diversification on the financial performance of quoted manufacturing firms in Nigeria. Journal of Research in Emerging Markets, 3(1), 44–57. https://doi.org/10.30585/jrems.v3i1.569
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Article Details


Income diversification, Financial performance, Return on Assets (ROA), Return on Equity (ROE), Return on Capital Employed (ROCE), Product-income segment, Non-product-income segment



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