BUSINESS RESTRUCTURING AND ITS IMPACT ON THE FINANCIAL OUTCOMES OF MANUFACTURING COMPANIES IN NIGERIA
Abstract
This study scrutinizes the effect of business restructuring on the financial performance of manufacturing companies in Nigeria. Specifically, it explores the impact of financial, portfolio, operational, and capital restructuring on these firms' financial performance. Utilizing an exploratory research design, the study uses secondary data sources from the annual reports of the chosen manufacturing companies covering the period 2013 to 2022. The analysis employs regression methods to investigate the relationships between types of restructuring and financial performance indicators. The findings reveal significant relationships between various types of restructuring and financial performance indicators in Nigerian manufacturing companies. Financial restructuring positively influences return on equity (ROE) with a statistically significant relationship (p < 0.05), indicating enhanced profitability through efficient capital allocation and risk mitigation. Conversely, higher current ratios (CURR) are linked with decreased ROE (p < 0.05), suggesting potential missed investment opportunities due to excess liquidity. Portfolio and operational restructuring exhibit positive effects on financial performance, with increases in portfolio restructuring (PR) and operational restructuring (OR) leading to improved financial performance with statistically significant relationships (p < 0.05). However, capital restructuring (CUR) shows a negative impact with a statistically significant relationship (p < 0.05), implying potential financial distress from increased leverage. These results highlight the importance of strategic restructuring in optimizing financial performance and resource management in Nigerian manufacturing companies. The study recommends that manufacturing companies carefully consider the implications of different restructuring strategies and adopt approaches that align with their long-term financial goals and objectives.