Competitor Accounting and Profitability of Listed Financial Institutions in Nigeria

Celestine Anayo Egbuhuzor,Douye Akoba,Gospel J Chukwu

doi:10.6007/ijarems/v10-i3/11084

Abstract

Companies strive to be profitable to maximize shareholder’s wealth. They can only do that by mastering their current trend in the business environment and having competitive strategies that will give them an edge over other companies. This study examined the relationship between competitor accounting and profitability of listed financial institutions in Nigeria. Specifically, the study investigated the relationship between competitor cost assessment, competitive position monitoring, competitor’s financial statement performance appraisal, and net profit margin of listed financial institutions in Nigeria. The ex-post facto research design was used. The study population was fifty-three (53) out of which a sample size of forty (40) was obtained using judgmental sampling technique. Multiple regression was used to test the postulated null hypotheses with the aid of Stata12. The study revealed a positive and significant relationship between competitor cost assessment and net profit margin, a negative and significant relationship between competitive position monitoring and net profit margin, and a positive and insignificant relationship between competitor financial statement performance appraisal and net profit margin. The implication of these findings is that managers of listed financial institutions in Nigeria should continuously analyse the financial statement of competitors to gain competitive advantage and be profitable.

Highlights

Decades ago, and presently, businesses around the world have strived to achieve set out goals using available resources at their disposal
As the business world gets more competitive, companies tend to seek out more information and spend more time and effort analysing them for the improved competitive advantage which will have a multiplier effect on the profitability of the firm in general
The regression result revealed a negative and significant relationship between competitive position monitoring and net profit margin (p-value= 0.001). This means that all other variables held constant, a 1% increase in competitive position monitoring leads to a 141.3% decrease in net profit margin of listed financial institutions in Nigeria

Summary

Introduction

Presently, businesses around the world have strived to achieve set out goals using available resources at their disposal. As the business world gets more competitive, companies tend to seek out more information and spend more time and effort analysing them for the improved competitive advantage which will have a multiplier effect on the profitability of the firm in general This has awoken the urgent need for competitor accounting for success in todays and tomorrow's competitive environment. In Nigeria, there are opportunities for new entrants looking to operate in the banking and insurance sector, as 4 out of 10 Nigerians are still underbanked in that they lack the access to a full range of basic financial services Coupling this lack of banking access with a growing middle class that is seeking an improved banking experience and businesses searching for lower and competitive interest rates, companies looking for opportunities in the financial service industries in Nigeria certainly have an advantage. This has significantly aroused the competitiveness of the financial service industries

Methods

Findings

Discussion

Conclusion