CORPORATE EFFICIENCY: THE ROLE OF SOUND FINANCIAL PRACTICES

Abstract

Appropriate execution of financial management practices (FMPs) is very important for companies to secure capital and take financial decisions necessary for growth, profitability and performance in general. As a result, this study critically evaluates financial management practices impact on corporate performance in business entities using investment, financing, and dividend decisions as dimensions of financial management practices. The research design chosen is the survey design. The population is considered infinite, hence the use of convenience sampling to select 170 respondents from the oil and gas, financial, manufacturing sectors, and MSMEs. Four-point Likert scale questionnaire was used. The PPMC and the multiple regression analysis served as tools for inferential analysis. The p-value of 0.000 across board showed that investment decisions, financing decisions, and dividend decisions have significant impact on corporate performance of business entities. The Pearson Correlation (r) values of 0.721, 0.785, and 0.857 indicate that business entity performance is strongly influenced by investment, financing, and dividend decisions. The combined predictor variables (investment decision, financing decision, and dividend decision) showed R Square (R²) to be 0.768 and the P-value as 0.000.and the ANOVA results confirm the positive strong impact. The recommendations made are that business entities should enhance their investment decision framework by incorporating comprehensive financial analysis and strategic alignment; optimize their financing strategy by carefully evaluating the cost and benefits of different financing options; and also implement a balanced dividend policy that aligns with both shareholder expectations and the company’s financial stability. The conclusion of the study is that financial management practices have strong positive significant impact on corporate performance.