Effects Of Capital Budgeting On A Firm's Portfolio Management (A Study Of Selected Companies In Nigeria)

ABSTRACT

 The study was designed to analyze the capital budgeting in the portfolio management of a firm. It looked at current year revenue based on new products developed. The data was obtained from articles, journals and were analyzed by ordinary least square (OLS) using SPSS software. The survey research was con ductèd on 10 (sample size) companies randomly selected. The result also showed that capital budgeting plays an important role in the portfolio management of companies in Nigeria. The coefficient determination R-square of 0.909 implied that 90.9% of sample variation is the dependent variable. The result shows that business fail because of lack of feasibility study or proper planning before investing in portfolio because there is little or no application of capital budgeting technique to selecting portfolio. It is therefore recommended that companies should make use of capital budgeting to assist them efficiently to construct, evaluate and measure the performance of their portfolio. It is also important that a firm maintains relevant cash flow that will support ciny investment decision. Based on the findings diversification of investment is encouraged to help offset the poor performance of securities and that capital assets pricing model (CAPM) is very significant to investors, it is strengthens the profitability necessary for companies to achieve their corporate objective of wealth maximization.