CAPITAL EXPENDITURE DECISIONS AND MARKET VALUE OF QUOTED FOOD AND BEVERAGES FIRMS IN NIGERIA

Abstract

This study examined the relationship between capital expenditure decisions and market value of quoted food and beverages manufacturing firms in Nigeria. Secondary data obtained from 22 quoted food and beverage manufacturing firms from 2012 - 2022 obtained from the Nigerian Exchange Fact book and annual reports of the quoted food and beverage manufacturing firms.  The study modeled market value as the dependent variables while capital expenditure decision was proxy using firms’ capital expenditure decision on equipment, buildings, human, maintenance, expansion and sustenance. Panel data methodology was employed while the fixed effects model was used as estimation technique at 5% level of significance. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit. The result show that the proxies of capital expenditure decision explained 94.4 percent variation in market value of quoted food and beverages manufacturing firms in Nigeria. The beta coefficient indicates that firms’ capital expenditure on sustenance contribute 0.97 percent, capital expenditure on expansion reduces market value by 0.006 percent, capital expenditure on plant leads to 8.9 percent increase in firms’ value, capital expenditure on human capital contributes 0.02 percent and capital expenditure on equipment reduced valuation of the firm by 0.01 percent. The model was judge significant based on f-statistic and probability value while the Durbin Watson found no autocorrelation among the variables.  The study conclude that capital expenditure decision have significant effect on market value of quoted food and beverage manufacturing firms in Nigeria. We recommend that policies such as optimization of capital investment decision to increase value of the quoted firms.
 Keywords:  Capital Expenditure Decisions, Valuation, Food and Beverage Manufacturing, Nigeria Firm Value Optimization.