ABSTRACT
This study examines the effect of firm characteristics on the financial performance of listed service firms in Nigeria. Specifically, the study determined the effect of firm size, firm age, leverage and sales growth on return on equity. In this study, twenty -one (21) service firms which have been listed in the Nigerian Exchange Group (NGX) was selected as the sample using judgemental sampling method and data was collected from these firm's yearly financial reports of 2016 - 2020.
The research design used was ex-post facto. Descriptive statistics, unit root test (Augmented Dickey - Fuller Test), Correlation analysis and Panel Least Square regression method were used to analyse the data. The firm performance has a weak positive correlation with firm characteristics except from financial leverage which was moderate at 0.5603 and thus indicates that the performance of a firm especially the listed ones cannot be separated from their stucture and value, such that their characteristics would always be a reason while some of them are performing well or bad in the market. Firm size has a positive effect on the financial performance of service firms and this can be attributed to pedigree and value of the firms over the years in terms of assets acquisition and stock holding whereas firm age, leverage and sales growth has a negative effect on the financial performance of service firms.
This study therefore concludes from the analysis that the characteristics of firm have not well played to their advantage, as they have not capitalised on their age, leverage and even sales growth, hence the characteristics of firms has not had the desired significant effect on the financial performance of the firms over the period of study.
The study suggests that the firms should look inward and engage in a more constructive organisational structure such as corporate governance, consumer satisfaction focus, extensive market research on meeting the needs of their clients and customers. Lastly, the assets of the firms can still be better utilised to improve the financial performance of the firm, through a standard monitoring and evaluation of the quality of firm's assets such that ratios such as the return on assets would be boosted.
Keywords: Firm Size, Firm Age, Leverage, Sales Growth, Financial Performance, Service Firm.
