This study deviates from other studies in a

This study deviates from other studies in a number of ways. Firstly, we study institutional quality along with other variables specifically financial factors that determine corporate investment. Our choice of Nigeria is based on the fact that the country is experiencing high rate of deficiencies in terms of institutional quality. Corruption as at high rate, political instability coupled with terrorism problems (e.g Bokoharam) are perceived to be some of the disturbing phenomena in the country. Our study Cy3 hydrazide spanned from 2002–2012; this is because the trend of Nigerian corporate investment has changed drastically. Before year 2000; corporate investments continuously increasing and highly encouraged; however, the current trend shows that investment opportunities in Nigeria have stifled by the increasing levels of uncertainties in the macroeconomic environment coupled with high poor institution. Nigerian business environment has moved backwards in terms of investor protection and the ease of starting a business (Nigeria was rated 133rd out of 183 countries in doing business, seeWorld Bank, 2012). The capital market exhibits various level of imperfections; these include imposition of price caps on share price movement, regulation of interest rates, presence of asymmetric information, agency costs and political instability which resulted in thinness of trading, low market capitalization and low percentage of turnover level among others (Adelegan Ariyo, 2008). In our analysis, we include fifty four (54), listed non-financial firms in Nigeria capital market ranging from manufacturing, conglomerate, oil companies to mention, but few. The remainder of this paper is sectioned into 4 parts. Next part discussed the literature review, followed by methodology, results and discussion while conclusion ends the paper.
Literature review
Methodology The main objective of this study is to examine the effect of institutional quality and firm-specific factors on corporate investment in Nigeria. Our sample selection is limited to listed non financial firms in Nigerian stock exchange market. We employ a variant of the Q model of investment. The Q-theory of investment was introduced by Keynes (1936) and expanded by other authors (e.g. Mills, Morling and Tease, 1994; Tobin, 1969). The basic Tobin average Q model iswhere the dependent variable is investment, is the shift parameter, and are the slope and error term respectively. To examine whether the sample firms are being constrained by deficiencies in institutional quality and whether those firms are being affected by other constraints such as financial constraint, we modified the model of Mills et al. (1994). Q model was augmented with Leverage, Cash flows, Stock of Liquid financial asset, Sales, institutional quality variables. The equation is From Eq. (2) Cash flow and Sales terms in Eq. (3) are contemporaneous – like investment, these are flows. They reflect current availability of internal funds and current demand pressures. Re-stating Eq. (2), we have Cash flows and Sales in Eq. (3) are flow variables like investment therefore other terms in Eq. (3) are lagged one period - these terms are stocks and are measured at the end of the period. The lagged value of the firms׳ financial variables has been employed since several studies have uncovered lagged effects of monetary policy on firms׳ activities (Romer Romer,1990). Using lag values also enables to minimize the endogeneity problem; it also avoids some of the problems associated with possible simultaneity in investment and capital structure decisions. Following the studies of Mills et al. (1994), Tobin Q and Leverage in Eq. (3) are in ratio, the other variables in nominal terms will be standardised by capital stock in order to avoid the normality problem. Re-stating Eq. (3) The study of this kind is dynamic by nature. We re-specify Eq. (4) to include the lag value of the dependent variable and all variables are in their first difference as shown in Eq. (5).