The Implication of Foreign Exchange on Profitability of Firm
Student: Happy Bosede Johnson (Project, 2025)
Department of Accounting
Delta State University, Abraka, Delta State
Abstract
The study investigated the relationship between exchange rate volatility and the profitability of listed nonfinancial firms ni Nigeria, with a focus on the nominal exchange rate (NEXR) and firm size (FSIZE) as key variables influencing return on assets (ROA). The findings revealed a significant positive relationship between the nominal exchange rate and profitability, indicating that higher nominal exchange rates enhance firm profitability by potentially lowering import costs and boosting export competitiveness. Conversely, firm size was found to have a significant negative impact on profitability, suggesting that larger firms face inefficiencies and higher operational costs that diminish their ROA. These results highlight the dual influence of exchange rate conditions and firm size on profitability, emphasizing the need for firms to manage exchange rate exposure and operational efficiency effectively to sustain profitability. Overall, the study underscores the critical role of macroeconomic factors and internal management practices in determining the financial performance of firms in Nigeria.
Keywords
For the full publication, please contact the author directly at: johnson.bosede@delsu.edu.ng
Filters
Institutions
- Covenant Polytechnic, Aba, Abia State 1
- Covenant University, Canaan Land, Ota, Ogun State 4
- Crawford University of Apostolic Faith Mission Faith City, Igbesa, Ogun State 2
- Crescent University, Abeokuta, Ogun State 1
- Cross Rivers University of Technology, Calabar, Cross Rivers State 142
- Delta State Polytechnic, Ogwashi-Uku, Delta State 11
- Delta State Polytechnic, Otefe, Delta State 12
- Delta State University, Abraka, Delta State 139
- Ebonyi State University, Abakaliki, Ebonyi State 17
- Edo University, Iyamho, Edo State 10