Executive Compensation and Financial Performance of Quoted Industrial Goods Manufacturing Firms in Nigeria

Abstract

The study investigated the relationship between executive compensation and financial performance of quoted industrial goods manufacturing firms in Nigeria. The study utilized an ex-post facto research design due to the lack of control over the data collected, focusing on four (4) listed industrial goods manufacturing companies in Nigeria out of a population of thirteen (13). This sample was selected purposively based on the availability of complete and up-to-date data from the companies' annual financial reports obtained from the Nigerian Exchange Bulletin for the year 2023. Through secondary data sources, the researcher conducted descriptive statistics and linear regression analysis to investigate the relationship between salary, bonus, and profit after tax of the selected firms. This approach allowed the researchers to explore existing data and draw insights into the financial dynamics of the industrial goods manufacturing sector in Nigeria without directly intervening in the data collection process. The results revealed a significant positive association between salary and profit after tax, indicating that higher salaries may contribute to increased profitability for these firms. However, bonus was found to have no significant impact on profit after tax. These findings suggest that while salary plays a crucial role in influencing profitability, bonus schemes alone may not directly affect the financial performance of industrial goods manufacturing companies in Nigeria. Hence, the investigators further suggested that management should review salary structures to ensure competitiveness and alignment with employee responsibilities and performance, potentially leading to increased productivity and profitability. Also, management should implement performance-based bonus schemes tied to specific key performance indicators or financial targets to incentivize employees towards strategic goals and drive productivity.