MANAGERIAL ABILITY AND THE RETURN ON CAPITAL EMPLOYED (ROCE) OF SELECTED LISTED CONGLOMERATE COMPANIES IN NIGERIA.
Abstract
This study examined the effect of managerial ability on Return on Capital Employed (ROCE) of listed conglomerate firms in Nigeria, a key indicator of investment efficiency and capital productivity in emerging economies. Despite extensive literature linking managerial competence to firm performance, empirical evidence remains inconsistent, particularly in developing-country conglomerates where institutional constraints may weaken this relationship. The study aimed to determine whether managerial ability significantly influences ROCE. A descriptive and explanatory research design was adopted using a ten-year panel dataset (2016–2025) from five listed Nigerian conglomerates, analyzed using Robust Least Squares regression to address heteroscedasticity and outlier effects. Managerial ability was proxied by Data Envelopment Analysis (DEA) and Sales Ratio, while ROCE served as the dependent variable, with leverage, firm size, and firm age as controls. The results revealed that DEA had a negative and statistically insignificant effect on ROCE (t = -1.21, p = 0.23), while leverage (t = 2.84, p = 0.01) and sales activity (t = 3.67, p = 0.00) were positive and significant, and firm age was negative and significant (t = -2.11, p = 0.04). The study concluded that managerial ability alone does not significantly drive ROCE, emphasizing the importance of structural and operational factors in investment efficiency.
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Published in INTERNATIONAL JOURNAL OF ACCOUNTING, FINANCE AND TAXATION
ISSN: 3027-0378
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