An investigation of financial management behaviour of administrators, budget slacks, and state-owned enterprises’ performance in Nigeria.

Abstract

The study investigates the financial management behaviour of administrators, budget slack adoption and performance of the State-Owned Enterprises of the Federal Government of Nigeria. A sample of 385 top administrators from all the existing 202 State-Owned Enterprises in various sectors at the federal level in Nigeria were selected and structured questionnaire was used to harvest information from them. They were analysed using multiple quantitative techniques ranging from factor and principal component analysis to weighted least square regression analysis, ordinal regression analysis, and logistics regression analysis, among others. The results show that about 47.3% of the administrators showed responsible financial management behaviours scale while about 52.7% reflected irresponsible financial management behaviour scale. Furthermore, Cash Management Sub-scale with coefficient of 0.1571282 is statistically significant at 5% level and thus, plays the most crucial role in developing the financial management behaviours scale, this is followed by socio-cultural beliefs scale. In another result, income, family size, financial knowledge, and financial literacy account for the largest variation in financial management behaviour of the administrators. Moreover, the result shows that the adoption of budget slack to a large extent does not significantly impact the financial management behaviour of the administrators. Optimism with coefficient of 0.5605328 and deliberative thinking with coefficient of 0.0880613 are the two factors that significantly impact budget slack adoption. A significant relationship was established between the financial management behaviour of the administrators and the State-Owned Enterprises’ performance in the last objective. More importantly, it was revealed that the irresponsible financial management behaviours scale has a more significant adverse effect on the performance of State-Owned Enterprises. The general implication of the study is that the sociocultural beliefs sub-scale, which was not captured in any of the previous studies as a measure of financial management behaviour, proved to be a good measure in this part of the world. The study further shows that budget slack adoption effect on financial management behaviour is not significant. Finally, the implication from findings in the survey shows that irresponsible financial management behaviour of the administrators has a significant negative impact on the performance of the SOEs.