FINANCIAL PERSPECTIVE OF THE BALANCED SCORECARD AND ORGANISATIONAL PERFORMANCE: EVIDENCE FROM SELECTED LISTED MANUFACTURING FIRMS IN NIGERIA (2019–2025)

Abstract

This study investigated the impact of financial perspective of Balanced Scorecard on the performance of the listed manufacturing companies in Nigeria in the period 2019 to 2025. In specific, the study examined the effect of cost efficiency, liquidity ratio and leverage ratio on return on assets (ROA). The annual reports and financial statements of six manufacturing firms listed on the Nigerian Stock Exchange were consulted to get secondary data for the study period. Descriptive statistics, correlation analysis, variance inflation factor, pooled ordinary least squares, fixed effects, random effects and Hausman test were used in the analysis. The Hausman test was used to justify the use of random effects model, and robust estimation was employed to improve the reliability of the results. The results revealed that there is positive and significant relationship between cost efficiency and organisational performance (β = 0.1461, p = 0.0416). The leverage ratio had a significant negative impact on the performance (β = −0.4332, p = 0.0106), suggesting that increased debt has a negative impact on returns on assets. There was a negative but statistically insignificant relationship (β = −0.0161, p = 0.5921) between liquidity ratio and organisational performance. This overall model was statistically significant and accounted for a significant amount of the variance in organisational performance across the sampled firms. The study finds that the financial perspective of the Balanced Scorecard continues to be relevant in the study of organisational performance in the Nigerian manufacturing sector. There is some evidence that cost management and debt policies play a significant role in the performance improvement. The study suggests that the manufacturing sector needs to improve cost management practices and adopt sustainable financing arrangements to improve organizational performance.