Al-Hikmah University Journal

Following the necessity for corporate managers to have extensive understanding of the roles and multiplier effects of their funding decisions on their firm’s survival quest and growth, this study is conducted to provide useful empirical information on how manufacturing companies behave in response to a number of influencing factors. Specifically, the study is designed to find out if a firm’s net cash flow and change in its product’s sales do influence its funding decisions, using a regression approach. The methodologies adopted for the study is anchored on the duo of the Agency and Trade-off theoretical framework while its coverage is the 35 listed Nigerian manufacturing firms between year 1990 and 2019 (a total of 29 years). Variables examined were selected on the premise of a three economic logic, viz: firm-specific factors, industrial-wide factors and economic factors. And being a quantitative type of study that focuses on a developing economy (Nigeria), the data used are of unbalanced panel and secondary type. Accordingly, finance (which is the mix of equity and borrowings) is the study’s dependent variable, which is measured on the submission of extant finance literature, on which variables such as: capital investment, dividend payout, net cash flow, corporate size, asset’ tangibility, economic uncertainty and change in product’ sales were tested. Overall, using a multivariate econometric model that captures all study’s intended variables, the study revealed through the regression analysis that all the tested factors in the study are determinants of firm’s funding decision, with the exception of corporate size, and that a firm’s net cash flow and change in its product’s sales informs corporate funding decisions positively.