American Research Journal of Economics, Finance and Management Volume 11 Issue 4, October-December 2023 ISSN: 2836-9416 Impact Factor: 5.57 Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com Official Journal of America Serial Publication American Research Journal of Economics, Finance and Management https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com 20 | P a g e EXPLORING THE RELATIONSHIP BETWEEN BREWERY FIRM SIZE AND FINANCIAL PERFORMANCE IN NIGERIA Dr. Chika Inyiama and Prof. Adaobi Okafor Department of Accountancy, Enugu State University of Science and Technology, Enugu State, Nigeria. Department of Accountancy, Enugu State University of Science and Technology, Enugu State, Nigeria. Abstract: The brewery industry, characterized by complex production processes and heavy fixed asset requirements, presents a unique accounting system known as process cost accounting. This system plays a pivotal role in assessing the financial performance of companies within the industry. However, despite their shared industry and external environment, individual firms exhibit varying financial performances due to a range of internal factors. These factors include firm size, age, debt ratio, quick ratio, inventory level, sales growth, physical capital intensity, and capital turnover. This study delves into the influence of these internal factors on firm performance within the brewery industry. Understanding these dynamics is crucial for brewers to optimize their financial standing in an industry where competitiveness is paramount. Keywords: Brewery industry, process cost accounting, financial performance, internal factors, firm size, debt ratio, inventory level, capital turnover. 1.0 Introduction The nature of production processes in the brewery industry demands a heavy fixed asset base. This is because they have a complex production process that requires the installation of machineries, plants, equipment and sometimes complete automation of the production line. Process cost accounting in the brewery industry reveals the peculiar nature of its accounting system that facilitates the determination of its financial performance. The financial performance of firms within the industry is influenced by a number of factors. Chandrapala and Knapkova (2013) stated that even though all firms operate in the same industry and interact with same external variables, their financial performances are not the same as a number of internal factors could be responsible for firm performance such as firm size, age, debt ratio, quick ratio, inventory level, sales growth physical capital intensity and capital turnover as suggested by Pavelkova and Knápková (2009). Yegon, Mouni and Wanjau (2014) citing Kamar, Rajan and Zingales (2001) suggested that what determines a firm size is the ownership of physical assets which are critical resources. The neoclassical theory of firm size supported by Lucas (1978) also looked at the firm size in terms of per capita capital in form of investment return and research and development. Pervan and Višić (2012) emphasized on the conceptual framework that advocates a negative relationship between firm size and profitability which is noted in the alternative theories of the firm. The theory, as stated, suggests that large firms come under the control of managers pursuing selfinterested goals and therefore profit maximization as the firm’s objective function which may be replaced by managerial utility maximization function. Akbas and Karaduman (2012) citing Athanasoglou, Brissimis and Delis (2008) claimed that size could impact mailto:contact@americaserial.com mailto:contact@americaserial.com American Research Journal of Economics, Finance and Management Volume 11 Issue 4, October-December 2023 ISSN: 2836-9416 Impact Factor: 5.57 Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com Official Journal of America Serial Publication American Research Journal of Economics, Finance and Management https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com 21 | P a g e the profitability negatively, for firms that become extremely large due to bureaucratic and other reasons. The nature of the relationship between firm size and economic performance has received considerable attention in the literature but has provoked vigorous debate as existing literatures provide conflicting results (Symeou, 2012). Some industries, organizations and sectors link large firms to better performance in line with the neoclassical theory of firm size while some research findings support the conceptual framework that advocates a negative relationship between firm size and profitability. This study, therefore, aims at examining the interactions between firm size and financial performance of selected firms in the Nigeria brewery sector; considering the contribution of the sector to national economy. The remaining part of the paper is arranged into four sections. Section 2, x-rays the existing related literature, section 3 documents the methodology for data analysis, section 4 discusses the empirical results while section 5 summarizes and concludes. 2.0 Review of Related Literature Pavelkova and Knápková (2009) posits that when a firm becomes larger, it enjoys economics of scale and its average cost of production is lower and operational activities are more efficient. Yang and Chen (2009) opines that large firms face less difficulty in getting access to credit facilities from financial institutions for investment, have broader pools of qualified human capital, and may achieve greater strategic diversification. Akbas and Karaduman (2012) while citing Hardwick (1997), stated that larger firms have some advantages such as greater possibility of taking advantage of scale of economies which can enable more efficient production, a greater bargaining power over both suppliers and distributors or clients, exploiting experience curve effects and setting prices above the competitive level. While citing Weiner and Mahoney (1981), Ravenscraft and Scherer (1987), Akbas and Karaduman (2012) also argued that larger firms are more stable and mature and they can generate greater sales because of the greater production capacity and finally, those firms have the chance of capital cost savings with the economies of scale. The understanding of the relationship between firm size and performance was advanced by Symeou (2012) when he examined whether firms enjoying higher growth potential are better performers, arguing that small economy size could contain firm growth potential and by extension firm performance. Controlling for the effects of competition, firm governance structure, and institutional risk, inter alia, the findings suggest that firm growth potential is not necessarily a limiting factor as both firms in small and large economies can operate efficiently. On the financial performance of Jordanian Insurance Companies, Almajali, Alamro and Al-Soub (2012) examined the factors that mostly affect financial performance. The findings revealed that Leverage, liquidity, Size, Management competence index have a positive statistical effect on the financial performance. The effect of firm size on profitability of virtually all the branches of Bank of Ceylon (BOC) and Commercial Bank of Ceylon Ltd (CBC) with 10 years accounting period was studied by Velnampy and Nimalathasan (2010). The correlation analysis conducted on the secondary data indicates that there is a positive relationship between Firm size and Profitability in Commercial Bank of Ceylon Ltd, while there is no relationship between firm size and profitability in Bank of Ceylon. mailto:contact@americaserial.com mailto:contact@americaserial.com American Research Journal of Economics, Finance and Management Volume 11 Issue 4, October-December 2023 ISSN: 2836-9416 Impact Factor: 5.57 Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com Official Journal of America Serial Publication American Research Journal of Economics, Finance and Management https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com 22 | P a g e The relationship between the capital structure and financial performance as evidenced from 21 industries in Karachi Stock Exchange in Pakistan was investigated by Javed and Akhtar (2012) using correlation and regression test on the financial data. The findings of the study show a positive relationship between the leverage, financial performance, growth and size of the companies. Bashir, Abbas, Manzoor and Akram (2013) identifies the factors significantly affecting the firm’s performance in food sector of Pakistan using one-way fixed effect model due to the presence of cross-sectional fixed effect. In the sector, long term leverage, size, risk, tangibility and non-debt tax shield were found to be the factors significantly affecting the firm’s financial performance. An examination of the impact of firm specific factors on company financial performance of 974 firms in the Czech Republic over the period 2005 to 2008, using data in the Albertina database was conducted by Chandrapala and Knápková (2013). Their research found that the firm size, sales growth and capital turnover are having significant positive impact on financial performance of firms, while debt ratio and inventory reflect significant negative impact on financial performance of firms. Taani and Banykhaled (2011) examined the effect of accounting information such as profitability, liquidity, debit to equity, market ratio, size which is derived from firm’s total assets, and cash flow from operation activities on earning per share (EPS) by using a sample of 40 companies listed in the Amman Stock Market. The findings reveal that profitability ratio (ROE), market ratio (PBV), cash flow from operation/sales, and leverage ratio (DER) has significant impact on earnings per share. A related study by Martani, Mulyono and Khairurizka (2009) reveals that profitability, turnover and market ratio has significant impact on the stock return. An examination of the effect of firm size and profitability on the extent of corporate social disclosures by Oil and Gas firms in Nigeria was done by Ebiringa, Yadirichukwu, Ogbu, and Ogochukwu (2013). A sample of twenty quoted companies was selected using the simple random sampling technique. The findings among others show that an insignificant negative correlation exists between CSR disclosure and firm size, while profitability is significantly and positively related to CSR disclosure of the companies. An investigation into the impact of capital structure on the financial performance of companies listed in the Tehran Stock Exchange was carried out by Pouraghajan, Malekian, Lotfollahpour and Bagheri (2012).They tested a sample of 400 firms among the companies listed in the Tehran Stock Exchange. Results suggest that there is a significant negative relationship between debt ratio and financial performance of companies, and a significant positive relationship between asset turnover, firm size, asset tangibility ratio, and growth opportunities with financial performance measures. However, the relationship between ROA and ROE measures with the firm age is not significant. Hendricks and Singhal (2000) examined firm characteristics such as firm size, the degree of capital intensity, the degree of diversification, the timing of TQM implementation, and the maturity of the program and found that smaller firms do significantly better than larger firms. Memon, Bhutto and Abbas (2012) investigated the impact of capital structure on firm financial performance in textile sector of Pakistan with 141 textile firms from 2004-2009. The results indicate that all the determinants of capital structure such as size, tangibility, debt to equity ratio, amount of annual tax, growth of firm and risk associated with business entity were significant and that Pakistan textile sector is performing below the optimum capital structure level and textile firms of large size have mailto:contact@americaserial.com mailto:contact@americaserial.com American Research Journal of Economics, Finance and Management Volume 11 Issue 4, October-December 2023 ISSN: 2836-9416 Impact Factor: 5.57 Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com Official Journal of America Serial Publication American Research Journal of Economics, Finance and Management https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com 23 | P a g e failed to achieve the economies of scale. The impact of firm level characteristics (size, leverage, tangibility, Loss ratio (risk), growth in writing premium, liquidity and age) on performance of insurance companies in Ethiopia was examined by Mehari and Aemiro (2013). The results of regression analysis reveal that insurers’ size, tangibility and leverage are statistically significant and positively related with return on total asset; however, loss ratio (risk) is statistically significant and negatively related with ROA. The above review of relevant works reveals that studies on the relationship between firm size and financial performance is still scanty and unbalanced amongst the leading sectors of the economy. Most of the existing studies on the subject centres on financial and allied institutions and not one of such studies considered the brewery sector of the Nigeria economy. Hence, this study aims at examining the causality, magnitude and nature of the interactions, with emphasis on relationship and effect, between firm size and financial performance in Nigeria brewery industry. 3.0 Methodology The order of interaction and integration was studied using the two-step error correction procedure of Engle and Granger (1985). This was adopted in consonance with the work done in Abraham (2013). The formation of the relevant models to facilitate analysis of data is as stated below: EPSt a0 a1LogTAt ………………………………………………………….(1) a2Ut-1 εt EPSt a0 a1LogTAt a2 RESt-1 εt ………………………………………………………….(2) Where:  a1 denotes the coefficient indicating the short run equilibrium relationship linking the two variables;  a2 denotes the coefficient indicating the long run relationship linking the variables with a priori expectation of -1;  Ut-1 or RESt-1 is the residual obtained from the linear regression of variables. The residual is lagged by one to fulfill the requirement of the granger representation theorem.  εt is the disturbance term for the model. Table 1: Description of Variables Unit Root Test Acronym EPS Details Earnings Per Share Mathematical Expression Net earnings available for common stock Average number of outstanding shares LogTA Log of Total Assets Fixed Assets + Current Assets Source: Author’s Arrangement mailto:contact@americaserial.com mailto:contact@americaserial.com American Research Journal of Economics, Finance and Management Volume 11 Issue 4, October-December 2023 ISSN: 2836-9416 Impact Factor: 5.57 Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com Official Journal of America Serial Publication American Research Journal of Economics, Finance and Management https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com 24 | P a g e The Unit root test was conducted on the time series data obtained from annual report and accounts of Nigerian Breweries Plc and Guinness Nigeria Plc, which represent the Nigerian brewery industry. Data series with unit root issues produces spurious regression when used for analysis. A graphical representation was made to initially ascertain the existence of unit root in the time series data. The trend of the line graphs reveals that the data series were not stationary and needs to be disinfected to avoid spurious regression. This is evident from the fact that the line graph did not cross the zero line even at an instance as shown below: Figure 1: Graphical Representation of the Variables with Unit Root Issues 8.6 8.4 8.2 7.6 Source: Author’s EView 8.0 Computation Figure 1 reveals that the time series data for total assets and earnings per share were non-stationary as the line graphs have wide disparity from zero and did not cross the zero line severally. The Augmented Dickey Fuller (ADF) procedure was applied in testing for existence of unit root or stationarity of time series data and the order of integration of the two variables under study. Table 2: Augmented Dickey Fuller (ADF) Unit Root Test Results 0 1 2 3 4 5 6 2000 2002 2004 2006 2008 2010 2012 EPS 7.4 2000 2002 2004 2006 2008 2010 2012 L O G T A mailto:contact@americaserial.com mailto:contact@americaserial.com American Research Journal of Economics, Finance and Management Volume 11 Issue 4, October-December 2023 ISSN: 2836-9416 Impact Factor: 5.57 Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com Official Journal of America Serial Publication American Research Journal of Economics, Finance and Management https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com 25 | P a g e Variables Test Critical Values Test Statistics Status 1 % 5 % 10 % ADF (Stationarity) EPS - 3.808546 - 3.020686 - 2.650413 - 5.287424 I(2) LogTA - 2.816740 -1.982344 - 1.601144 - 3.683826 1(2) Source: Researcher’s EView 8.0 Computation Table 2 reveals that both Earnings Per Share and Total Assets data series have unit root but were found to be stationary at second difference. There integration of the same order I(2) is an indication that the variables could cointegrate in line with the opinion of Engle and Granger (1985). They opined that when time series data are integrated of the same order, the data series tend to cointegrate. This means that their short term characteristics are sustainable at the long term. They listed the consequences of such cointegration to include that; • Time series data that are integrated of the same order I(2), share a stochastic component and a long run equilibrium relationship. • Wide disparities from the zero line of equilibrium as a result of volatilities will be corrected over a period of time. • ΔYt is believed to be responding to shocks to X under a state of cointegration over the short and long term. However, after subjecting the time series data to unit root test, a new set of data series were generated through the Augmented Dickey Fuller (ADF) procedure. The line graphs that resulted from the new series were found to be closer to the equilibrium, indicating that the data series have attained stationarity after the repair. Figure 2: Graphical Representation of the Variables without Unit Root Issues 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 mailto:contact@americaserial.com mailto:contact@americaserial.com American Research Journal of Economics, Finance and Management Volume 11 Issue 4, October-December 2023 ISSN: 2836-9416 Impact Factor: 5.57 Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com Official Journal of America Serial Publication American Research Journal of Economics, Finance and Management https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com 26 | P a g e DLOGTA .24 .20 .16 .12 .08 .04 .00 -.04 -.08 Source: Author’s EView 8.0 Computation Table 3 explains the characteristics of the research variables. It reveals the mean, median, standard deviation and other frequency distribution indices for the study, as well as the maximum and minimum values of the time series data under study. Table 3: Descriptive Statistics DETAILS EPS LOGTA Mean 2.865000 7.989534 Median 2.450000 7.943398 Maximum 5.700000 8.404207 Minimum 0.770000 7.557553 Std. Dev. 1.630676 0.244133 Skewness 0.393132 0.316478 Kurtosis 1.837475 2.580741 Jarque-Bera 1.148978 0.336239 Probability 0.562993 0.845253 Sum 40.11000 111.8535 Sum Sq. Dev. 34.56835 0.774812 Observations 14 14 Source: Author’s EView 8.0 Computation The coefficient of skewness for EPS and Total Assets have values below one (1) signifying a normal frequency distribution. Kurtosis coefficient is 1.837475 and 2.580741 for EPS and Total Assets respectively. Jarque-Bera statistic shows that EPS and Total Assets have insignificant p-values of 0.562993 and 0.845253 respectively. Both Kurtosis and Jarque-Bera statistic confirm that the time series data were normally distributed. The standard deviation of EPS is more volatile than that of Total Assets. Granger-Causality test is conducted in the context of linear regression models and specified in bivariate linear autoregressive model of two variables X1 and X2 based on lagged values of EPS and Total Assets as applied by Pasquale (2006) and cited in Inyiama (2013): P p 2000 2002 2004 2006 2008 2010 2012 D E P S 2000 2002 2004 2006 2008 2010 2012 mailto:contact@americaserial.com mailto:contact@americaserial.com American Research Journal of Economics, Finance and Management Volume 11 Issue 4, October-December 2023 ISSN: 2836-9416 Impact Factor: 5.57 Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com Official Journal of America Serial Publication American Research Journal of Economics, Finance and Management https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com 27 | P a g e X1(t) =∑ A11,jX1(t−j) + ∑ A12,jX2(t−j) + E1 (t) ………………………………….(5) j =1 j =1 P p X2(t) =∑ A21,jX1(t−j) + ∑ A22,jX2(t−j) + E2 (t)……………………………………(6) j =1 j =1 Where; p is the maximum number of lagged observations included in the equation, the matrix A contains the coefficients of the equation (i.e., the contributions of each lagged observation to the predicted values of X1(t) and X2(t) , X1 is the Earnings Per Share which is constant while X2 takes the form of Total Assets index and value and, E1 and E2 are residuals (prediction errors) for each time series data. Table 4: Pairwise Granger Causality Tests Date: 10/16/14 Time: 20:08 Sample: 2000 2013 Lags: 2 Null Hypothesis: Obs F- Statistic Prob. DLOGTA does not Granger Cause DEPS 11 2.92233 0.1300 DEPS does not Granger Cause DLOGTA 0.26709 0.7742 Source: EView 8.0 Computation Table 5: Pairwise Granger Causality Tests Date: 10/16/14 Time: 20:11 Sample: 2000 2013 Lags: 1 Null Hypothesis: Obs F-Statistic Prob. DLOGTA does not Granger Cause DEPS 12 1.89060 0.2024 DEPS does not Granger Cause DLOGTA 1.67404 0.2279 mailto:contact@americaserial.com mailto:contact@americaserial.com American Research Journal of Economics, Finance and Management Volume 11 Issue 4, October-December 2023 ISSN: 2836-9416 Impact Factor: 5.57 Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com Official Journal of America Serial Publication American Research Journal of Economics, Finance and Management https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com 28 | P a g e Source: EView 8.0 Computation Tables 4 and 5 indicate that there is no causality running from either earnings per share to total assets or from total assets to earnings per share, both at lagged periods 1 and 2. This implies that earnings per share does not granger cause total assets and vice versa. 1.5 The time series graph of fitted observations as shown in Figure 3 is very close to the graph of the corresponding observed values. Table 6: Residual Test for Stationarity Null Hypothesis: RES has a unit root Exogenous: Constant Lag Length: 0 (Automatic - based on SIC, maxlag=1) t-Statistic Prob.* Augmented Dickey-Fuller test statistic -3.299552 0.0473 Test critical values: 1% level -4.420595 5% level -3.259808 10% level -2.771129 *MacKinnon (1996) one-sided p-values. Warning: Probabilities and critical values calculated for 2 0 observations and may not be accurate for a sample size of 9 Augmented Dickey-Fuller Test Equation Dependent Variable: D(RES) Method: Least Squares Date: 10/22/14 Time: 12:30 Sample (adjusted): 2005 2013 Included observations: 9 a fter adjustmen ts mailto:contact@americaserial.com mailto:contact@americaserial.com American Research Journal of Economics, Finance and Management Volume 11 Issue 4, October-December 2023 ISSN: 2836-9416 Impact Factor: 5.57 Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com Official Journal of America Serial Publication American Research Journal of Economics, Finance and Management https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com 29 | P a g e Variable Coefficient Std. Error t-Statistic Prob. RES(-1) -1.136048 0.344304 -3.299552 0.0131 C 0.007662 0.027982 0.273811 0.7921 R-squared 0.608655 Mean dependent var 0.013442 Adjusted R-squared 0.552749 S.D. dependent var 0.125277 S.E. of regression 0.083781 Akaike info criterion -1.928084 Sum squared resid 0.049135 Schwarz criterion -1.884256 Log likelihood 10.67638 Hannan-Quinn criter. - 2.022664 F-statistic 10.88704 Durbin-Watson stat 2.227577 Prob(F-statistic) 0.013129 Source: Author’s EView 8.0 Computation Table 6 reveals that the variables are co-integrated at 5 percent significance level. According to the Granger Representation Theorem, when the variables under study are integrated of the same order and are found to be cointegrated, an error correction model could be estimated. Abraham (2013) supports that if the variables are found to cointegrate, then the second step of the Engle and Granger (EG) procedure which involves specifying an error correction model (ECM) for each equation in the system could be done. He emphasized that the multivariate EG two-step procedure for estimating ECM however, requires that there are only two variables in the system. Therefore, the output of the regression analysis, after the estimation, is then presented in Table 7. Table 7: Regression Analysis Result Dependent Variable: DEPS Method: Least Squares Date: 10/22/14 Time: 09:55 mailto:contact@americaserial.com mailto:contact@americaserial.com American Research Journal of Economics, Finance and Management Volume 11 Issue 4, October-December 2023 ISSN: 2836-9416 Impact Factor: 5.57 Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com Official Journal of America Serial Publication American Research Journal of Economics, Finance and Management https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com 30 | P a g e Sample (adjusted): 2005 2013 Included observations: 9 after adjustments Variable Coefficient Std. Error t-Statistic Prob. C 0.418502 0.108770 3.847585 0.0085 DLOGTA 1.868122 1.148158 1.627061 0.1548 DRES 2.106872 0.760097 2.771847 0.0323 R-squared 0.652150 Mean dependent var 0.547778 Adjusted R- squared 0.536199 S.D. dependent var 0.393820 S.E. of regression 0.268203 Akaike info criterion 0.467057 Sum squared resid 0.431597 Schwarz criterion 0.532798 Hannan-Quinn Log likelihood 0.898244 criter. 0.325187 F-statistic 5.624396 Durbin-Watson stat 1.620818 Prob(F-statistic) 0.042090 Source: Author’s EView 8.0 Computation Table 7 reveals that Total Assets has a positive but insignificant short run effect on financial performance as proxied by EPS. It further reveals that the long term effect of total assets on financial performance is positive and significant. The error correction mechanism suggests that deviations from equilibrium are corrected at approximately 187% per annum. This implies that the distortions affecting EPS in the long run could be corrected in approximately six months while adjusted R2 stood at 54%. Table 8: Correlation Results Variables EPS CAR Earnings Per Share (EPS) 1.000000 Firm Size (LogTA) 0.324590 1.000000 Source: Author’s EView 8.0 Computation Table 8 reveals a positive correlation between EPS and Total Assets. The relationship between EPS and Total Assets is not a strong one. This signifies that an increase in Total Assets could result to an increase in EPS, holding other factors constant. The strength of the relationship is estimated at approximately 32.5%. This is in line with the insignificant effects which Total Assets exerts on EPS as revealed by the regression analysis. 5.0 Summary and Conclusion The study aims at determining the extent to which Earnings Per Share is influenced by the level of Total Assets maintained by firms in the Nigeria brewery industry, as well as the nature and magnitude of their causalities. The researcher applied the 2-step cointegration and error correction model of Engle and Granger (1985) in a simple regression framework. Firm Size has both short and long term positive effect on EPS. However, the long run relationship is significant at 5%. On causalities, there is no mailto:contact@americaserial.com mailto:contact@americaserial.com American Research Journal of Economics, Finance and Management Volume 11 Issue 4, October-December 2023 ISSN: 2836-9416 Impact Factor: 5.57 Journal Homepage: https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com Official Journal of America Serial Publication American Research Journal of Economics, Finance and Management https://americaserial.com/Journals/index.php/ARJEFM, Email: contact@americaserial.com 31 | P a g e causality running from either EPS to Total Assets or otherwise, both at 1 year and 2 years lagged periods. The implication is that EPS does not granger cause Total Assets and vice versa. The long term positive effect of Total Assets on EPS is in line with our a priori expectation that an increase in asset base of a brewery firm will lead to a positive shift in the firm’s financial performance. The finding is consistent with the outcome of the studies carried out by Pavelkova and Knápková (2009), Memon, Bhutto and Abbas (2012), Chandrapala and Knápková (2013), Pouraghajan, Malekian, Lotfollahpour and Bagheri (2012), Bashir, Abbas, Manzoor and Akram (2013), Velnampy and Nimalathasan (2010), Almajali, Alamro and Al-Soub (2012). This could be attributable to the capital intensive nature of the brewery industry. The production lines of most of the big firms within the industry are highly automated which results in more quality output and production level that guarantees customer satisfaction through supplies at very short notice. Under this situation, there is no stock out cost. Hence, brewery firms should strive to attain this height of a sound asset base in order to meet, on a timely basis, their responsibilities towards the customers and by extension, improve on their financial performance; especially at the long term. References Abraham, W.T.(2013). “Stock Market Reaction to Selected Macroeconomic Variables in the Nigerian Economy”, CBN Journal of Applied Statistics 2(1), 61 – 70. Akbas, H. E. and Karaduman, H.A. (2012). “The Effect of Firm Size on Profitability: An Empirical Investigation on Turkish Manufacturing Companies”, European Journal of Economics, Finance and Administrative Sciences, Issue 55:21-27. Almajali, A.Y., Alamro, S.A. and Al-Soub, Y.Z. (2012). “Factors Affecting the Financial Performance of Jordanian Insurance Companies Listed at Amman Stock Exchange”, Journal of Management Research, 4 (2). Athanasoglou, P.P., Brissimis, S.N. and Delis, M.D (2008). “Bank Specific, Industry-Specific and Macroeconomic Determinants of Bank Profitability”, Journal of International Financial Markets, Institutions and Money, 18 (2), 121-136. Bashir, Z., Abbas, A., Manzoor, S. and Akram, M.N. (2013). “Empirical Investigation of the Factors Affecting Firm’s Performance: a Study Based on Food Sector of Pakistan”, International SAMANM Journal of Finance and Accounting, 1(2): 11-23 Chandrapala, P. and Knápková, A. (2013). “Firm-specifi c factors and fi nancial performance of fi rms in the Czech Republic”. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 7: 2183–2190 Dickey, D. A. and Fuller, W. A. (1979). “Distributions of the Estimators for Autoregressive Time Series with a Unit Root”. 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