Abstract
AbstractThe study investigates how the incidence and severity of information and agency problems vary across firms and over time in Nigeria, and assesses the differential effects on corporate investment. A reduced form q-cash flow model and interaction approach was adopted to examine the effects of firm size, age and industry specific characteristics on cash flow. The model was estimated using panel data for Nigerian manufacturing firms from 1984-2000. Financial effects are generally important for investment in all firms. However, the extent and impact of financial effects are not uniformly distributed. The study concludes that the effect of size is neutral; however, older firms tend to rely more on internal funds to finance their corporate investment than the newer firms. The effect of financial factors on investment varies across firms according to their industrial characteristics.
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