AN ASSESSMENT OF RISK ANALYSIS TECHNIQUES AND INVESTMENT PERFORMANCE AMONG NIGERIAN FIRMS
Ayodele Thomas D.
Department of Accounting and Finance,
Ajayi Crowther University, Oyo, Oyo State, Nigeria
ayodeleconcept@yahoo.com
ABSTRACT
The trust of this paper is to assess how far the Nigerian firms’ managers make use of risk analytical techniques in their project evaluation and management, and the effect of such analytical techniques on the investment performance of their firms. The population of the study comprise Nigerian manufacturing companies out of which a random sample of 22 were selected from Lagos State being the most industrialized state in Nigeria. Simple percentage was used to classify responses of respondents supported by ranking of the various risk analytical techniques in terms of their popularity among the firm’s managers. The findings of the study indicate that Nigerian firms’ managers make use of risk analytical techniques, though the use of payback period method is more popular than others. It was also discovered that the use of analysis cuts across all categories (sizes) of firms operating in Nigeria and positively affect their performance. It is thus recommended that economic and political factors should always be taken into consideration when appraising investment by any to create a conducive environment for firms to operate efficiently.
Keywords: Risk averse, Risk Premium, Variance, Certainty Equivalent, Systematic Risk