Firm Growth and Financial Performance of Listed Consumer Goods Firms in Nigeria: The Role of Turnover, Equity and Total Assets

Abstract

Firm growth is often interpreted as an indicator of corporate strength, yet expansion in sales, equity, and assets does not necessarily translate into superior profitability. This study therefore shifts the focus from the magnitude of firm growth to the quality and profitability of growth, examining whether different dimensions of expansion are effectively converted into financial performance among listed consumer goods firms in Nigeria. Specifically, the study investigates the effects of turnover, equity, and total assets on return on assets (ROA), drawing on Sustainable Growth Theory to argue that growth creates economic value only when the resources supporting expansion generate commensurate returns. The study employs a balanced panel of 60 firm-year observations from five consumer goods firms listed on the Nigerian Exchange Group - Nestlé Nigeria Plc, Nigerian Breweries Plc, Unilever Nigeria Plc, Dangote Sugar Refinery Plc, and Cadbury Nigeria Plc., covering 2014–2025. Descriptive statistics, Pearson correlation analysis, variance inflation factor diagnostics, panel unit root tests, and pooled OLS, fixed-effects, and random-effects estimations are employed. The Hausman test favours the fixed-effects model (χ² = 9.8894, p = 0.0195). Given evidence of groupwise heteroscedasticity and cross-sectional dependence, inference is based on fixed-effects estimation with Driscoll–Kraay standard errors. The findings reveal an uneven growth–performance relationship. Turnover has a positive but statistically insignificant effect on ROA (β = 0.0000107, p = 0.9859), suggesting that revenue expansion alone does not automatically generate higher returns. Equity, by contrast, has a positive and highly significant effect on profitability (β = 0.0051, p = 0.0000), while total assets have a negative and significant effect (β = −0.0008, p = 0.0090). The model explains approximately 76% of within-firm variation in profitability. The study’s central contribution is the demonstration that growth is not economically homogeneous: internally supported equity expansion appears more capable of generating profitability than asset accumulation, while turnover growth without corresponding efficiency gains may remain financially neutral. The study consequently argues for a shift from pursuing growth for its own sake toward profitability-oriented growth, emphasising stronger equity foundations, disciplined asset utilisation, and efficiency-driven revenue expansion as pathways for converting corporate growth into sustainable financial performance.