Non-financial Performance Measures and Firm Value in Nigeria: What is the Link?

Financial measures have been and continued to be used for measuring and understanding the health of business organizations. These measures have been criticized as backward looking and debates on the usefulness of non-financial measures (NFM) have been on. This paper examined the relationship between NFM and firm value of quoted companies in Nigeria from 2006-2010. The companies were classified into 32 industrial sectors made up of 199 listed companies. Systematic sampling technique was used to select 16 sectors comprising of 134 companies. At least 50% of the number of companies in each sector was selected using random sampling technique which gave rise to sample size of 66 companies. However, companies with incomplete data were eliminated resulting in a final sample size of 47companies. The NFM were categorized into eight classes. A regression analysis of the model revealed that NFM accounts for 15.6% influence on firm value in Nigeria. NFM such as new product development; strength of market position; and quality of investor communication adopted by companies in Nigeria positively impact on firm value. It was recommended that companies in Nigeria should choose appropriate mix of performance measures in designing financing mix policy and corporate financial policy. Companies in Nigeria should pay special attention to issues of brand image; strength of marketing/advertising; management credibility; and research leadership. They should also adopt adhocracy and market cultures to enhance the value of the firm.