IMPACT OF CORPORATE RISK ON FINANCIAL PERFORMANCE OF LISTED FOOD AND BEVERAGE COMPANIES IN NIGERIA

Abstract

This study investigated corporate risk and financial performance of food and beverages
companies in Nigeria. It focuses on how risks such as liquidity, credit and operational risks
affect return on assets. The food and beverages sector plays a significant role in national
development through its contribution to GDP, job creation and provision of essential
households’ consumables. Given the dynamic and uncertain operating environment, effective
risk management is crucial for sustaining performance in the sector. Despite its importance,
there is limited empirical evidence in Nigeria that jointly considers the effects of credit,
liquidity, and operational risks on ROA within this sector; hence, this study focuses
specifically on listed food and beverages companies. The study used an ex-post facto
research design, and the period of study is 5 years ranging from 2020-2024. All 14 listed
companies in the sector were covered by this study. Data were also obtained from annual
financial statements of the sampled companies and analysis were done using regression
technique with the aid of Stata 13 version. The results revealed that credit risk has a negative
and statistically significant effect on ROA, suggesting that higher credit exposure reduces
profitability. Liquidity risk was found to have a positive but statistically insignificant effect
on ROA, suggesting a weak influence on performance. In contrast, operational risk exhibited
a positive and significant effect on ROA, implying that effective management of operational
activities can promote financial performance. Finally, corporate risk remains a critical
determinant of performance in the Nigerian food and beverages sector. The study therefore
recommends that companies adopt more stringent credit evaluation procedures and
continuously monitor their credit portfolios to minimize default risk. Additionally, companies
should ensure adequate liquidity levels to ensure they can meet short-term obligations
without disrupting operations.