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An Econometric Framework for Evaluating the Impact of Corporate Investment Behavior on Market Valuation of Quoted Manufacturing Firms in Nigeria

DOI https://doi.org/10.55640/tprjsms-v03i07-01
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Dr. Arjun Mehta 1 , Dr. Priya Nair 1 ,
4 Department of Management Studies, Himalayan Institute of Technology, India
4 School of Business Analytics, South India Institute of Science and Management, India

Abstract

This study develops an econometric framework for evaluating the impact of corporate investment behavior on the market valuation of quoted manufacturing firms in Nigeria. Corporate investment decisions—particularly in working capital, fixed assets, and financing structure—play a critical role in determining firm value and investor perception in emerging markets. Drawing on financial intermediation theory and firm growth lifecycle perspectives, the study synthesizes empirical insights from prior literature to construct a structured analytical model that links investment behavior to market valuation outcomes. The framework emphasizes working capital efficiency, capital allocation decisions, and financing accessibility as key transmission channels influencing firm value. Evidence from developing economies suggests that inefficient capital management constrains profitability and market performance, while optimal investment strategies enhance liquidity, operational efficiency, and investor confidence. In the Nigerian manufacturing context, structural constraints such as credit accessibility, macroeconomic instability, and institutional inefficiencies further shape investment outcomes. The study proposes an integrated econometric model incorporating firm-specific and macroeconomic variables to capture these dynamics. The findings from synthesized literature indicate that corporate investment behavior significantly influences market valuation through profitability, risk perception, and financial sustainability channels. The paper contributes to financial management literature by offering a structured framework applicable to emerging market manufacturing firms, with implications for corporate governance, investment policy, and market efficiency.

Keywords

Corporate investment behavior, market valuation, econometric framework

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