1 Department of Business Administration, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria.
2 Department of Business Education, Federal College of Education (Technical), Isu Ebonyi, Nigeria.
3 Economic behaviour and Governance, University of Kassel, Hesse, Germany.
Review Article
World Journal of Advanced Research and Reviews, 2024, 23(03), 1675–1685
Received on 04 August 2024; revised on 11 September 2024; accepted on 13 September 2024
This paper explores the relationship between cash flow and capital investment of a firm. Using a panel of Nigerian publicly quoted firms in the services and consumer goods sectors, we found that cash flow is insignificantly related to capital investment. This observed insignificant relationship is stronger in episodes where we have a sub-sample of younger firms. The younger firms recording insignificant relationships revealed that these firms cannot easily access external funds when there is a cash flow shortfall because of their low level of experience in their socio-economic networks. On the evidence of older firms, the study shows that when there is a cash flow shortfall for older firms, these firms may face difficulties in financing their investment with internal sources of funds; though, these firms can easily access external funds because of their level of experience in socio-economic networks. The results provide support that internal and external sources of funds can be substituted perfectly for experienced firms.
Capital investment; Internal finance; Cash flow; Debt ratio; Growth opportunity
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Patrick Chigozie Moneme, Itiri Idam Okpara, Olaide Monsurat Akano, Ogbonnaya Abraham Onuaja and Kingsley Enujiofor Ikegbunam. Cash flow and capital investment: Empirical evidence of firms in services and consumer goods sector. World Journal of Advanced Research and Reviews, 2024, 23(3), 1675-1685. Article DOI: https://doi.org/10.30574/wjarr.2024.23.3.2798