TO THE STUDY
company operates within the internal and external environments of
business. The internal environments are
within a firm such that the prevailing factors are most times very subject to
the control of the managers. The
external environment has to do with the larger business environments in which a
firm operates; and the factors therein are not subject to the control of the
managers. The factors in the external
environment not subject to the control of a manager generally can be regarded
as macro economic factors or variables.
corporate managers cannot control the macro economic variables but the
government can control them through several policies. Thus, like all experts, the government in
order to do a good job of managing the economy, will have to study, analyze and
understand the major variables that affect or determine the current behavior of
the macro-economy. Examples of the
macro-economic variables that affect the economy and firms majorly include
exchange rate, foreign direct investment, inflation rate, interest rate, money
supply, etc. The management of these
variables is usually done through fiscal and monetary policy by the government
and her agencies e.g. the Central Bank.
macro economic variable that may impact on firms’ performance is exchange
rate. Firms’ financials are presented in
terms of the home currency. Exchange
rate increases or decreases the value in home currency of revenues and cost
incurred in foreign currency. According
to Lars (2003), exchange rate increases or decreases earnings in home currency
share of total costs. In other words,
exchange rate increases or decreases earnings in home currency before interest
costs. Against this backdrop, the study
examines the impact of macro economic variables on corporate performance in
OF RESEARCH PROBLEM
on the relationship between macro economic variables and firm’s performance
have been on going in advanced countries of the world with little or no
research in developing countries of the world such as Nigeria. It is this existing gap that informed the
rationale behind this study. In the
light of the above, the following research questions are raised:
is the effect of inflation rate on corporate performance in Nigeria?
is the relationship between exchange rate and corporate performance in Nigeria?
does interest rate affect corporate performance in Nigeria?
there a relationship between money supply and the performance of corporate
organizations in Nigeria?
OF THE STUDY
general objective of the study is to evaluate the impact of macro economic
variables on corporate performance in Nigeria.
However, the specific objectives are stated as follows:
ascertain the effect of inflation rate on corporate performance in Nigeria.
find out if there is a significant relationship between exchange rate and
determine how interest rate affect corporate performance in Nigeria.
examine the relationship between money supply and the performance of corporate
organizations in Nigeria.
order to validate the relationship between macro economic variables and
corporate performance in this study, the following alternative hypotheses are
a. H1: Exchange rate influences corporate
b. H2: there is a relationship between inflation
rate and corporate performance.
c. H3: Foreign direct investment influence
corporate performance in Nigeria.
There is a relationship between money supply and the performance of corporate
organizations in Nigeria.
H5: Interest rate affect corporate performance in Nigeria.
1.5 SCOPE OF THE STUDY
study examines the effects of macro -economic variables on corporate
performance in Nigeria. The time period
the study covers is 2002 to 2011. In
other words, the study is a time series one.
The sample size is sixteen quoted firms which are listed on the floor of
the Nigerian Stock Exchange.
1.6SIGNIFICANCE OF THE
study is expected to be relevant to a number of persons and institutions in
Nigeria. First, the Federal Government
of Nigeria will find the outcome of this study useful in terms of making
decisions relating to the macro economic environment; in other words, it will
help the government to regulate the interest rate, inflation rate, exchange
rate and others with a view to achieving macro economic stability so as to
assist the companies operating in Nigeria. The Central Bank of Nigeria definitely will
find the study very much useful in terms of devising good monetary policy so as
to enhance company’s performance and foreign investors into the Nigeria
future researchers will find the study useful in terms of reference materials
on a similar subject matter as this.
1.7 LIMITATIONS OF THE
limitations of this study include data constraint, inadequate research
materials extensively dealing on the subject matter in Nigeria. The sample size also limits the study due to
time factor and its practicality.
Similarly, there is also the problem of generalizing the outcome of the
study to other non-manufacturing firms in Nigeria in terms of how macro economic
variables may have affected their performance.