Corporate Finance Decisions and Value Creation in Nigerian Conglomerates

Conglomerate firms in Nigeria operate across diverse industries, creating complex capital allocation challenges and raising fundamental questions about whether diversified corporate structures create or destroy shareholder value. This study examines the corporate finance decisions of selected Nigerian conglomerates and their relationship with value creation, focusing on capital structure choices, dividend policies, investment allocation, and acquisition strategies. Secondary data are gathered from audited financial statements and investor presentations of five major Nigerian conglomerates listed on the Nigerian Exchange Group for the period 2018 to 2023. Value creation is assessed using economic value added, Tobin's Q, and market-to-book ratios, while corporate finance decisions are measured through leverage ratios, payout ratios, and capital expenditure intensity. The study employs panel regression and event study methodology to evaluate the market's response to significant corporate finance decisions. The theoretical framework integrates the capital structure irrelevance proposition, the free cash flow theory of diversification discount, and the resource-based view of corporate scope. The geographic spread of conglomerate operations examined spans the South West, South South, and North West, providing insight into how regional economic conditions interact with group-level capital allocation. Existing literature on Nigerian conglomerates is limited, and this study contributes a systematic analysis of finance-value linkages that can inform both managerial decision-making and investor analysis of diversified firms. Findings carry implications for group finance directors, institutional investors, and the Nigerian Exchange Group's listing and governance standards. Keywords: corporate finance, conglomerates, value creation, capital structure, Nigerian Exchange Group