ABSTRACT

Cost management is one of the most significant strategies in company performance and financial management which any successful firm, especially manufacturing firms have to effectively manage in periods of sales revenues decline, as well as during periods of sales growth.  Hence, managing cost of production for manufacturing companies in Nigeria is at the focal point of present day management teams. Manufacturing companies in Nigeria compete in a highly turbulent environment and managers are constantly seeking for cost reduction systems to implement so as to enhance financial performance of their respective companies.  This empirical study evaluated the effect of input cost on financial performance of quoted manufacturing companies in Nigeria by adopting and implementing the Kaizen Costing System.  To this end, the study employed secondary data, based on Ex-post facto research design and made use of a Panel Data set collected from forty-two (42) quoted manufacturing companies in the Nigerian Stock Exchange for the financial periods 2010 to 2017.  The independent variables employed for the study were Direct Cost, Finance Cost, Operating Cost, Monitoring cost, Firm Size, Financial Leverage and financial performance dependent variables included: Sales Growth, Economic Value Added, Market Price per Share and Net Assets Value per Share.  The data collected were analyzed using analytical software: Stata version 13 to conduct the descriptive statistics, correlation, and regression analysis.  The study found that: As regards Finance Cost, there is no statistical effect on Market Price per Share, Sales Growth, and Economic Value Added but as regards Net Assets Value per share, Finance Cost is positive and statistically significant at 5%.  For Direct Cost, there is no statistical effect on Market Price per Share, Sales Growth, and Economic Value Added but concerning Net Assets Value per Share, Direct Cost is negative and statistically significant at 5%.  Concerning Operating Cost, there is no statistical effect on Market Price per Share, Sales Growth and Economic Value Added but as regards Net Assets Value per Share, Operating Cost is negative and statistically significant at 5%.  There is no statistical effect of Monitoring Cost and Firm Size on all variants of performance variables used in the study.  As regards Financial Leverage, there is no statistical effect on Market Price per Share and Sales Growth.  However, pertaining to Net Assets Value per Share and Economic Value Added, Financial Leverage is negatively and positively (respectively) and statistically significant at 5% levels.  Hence, this study recommends that Managers of manufacturing companies in Nigeria should adopt and implement the Kaizen Costing System to complement existing cost reduction techniques so as to strengthen their cost reduction and financial performance possibilities in the present day global market place.  The need for managers of the manufacturing sector in Nigeria to adopt and implement the Kaizen Costing System alongside existing cost reduction techniques is even more crucial as Nigeria advances to become one of the top 20 economies in her Vision 2020 Agenda.  Specifically, the present study recommends that management of manufacturing companies in Nigeria should adopt and implement the Kaizen Costing System alongside the corporate Kaizen Culture so as to reduce Cost of Operations and Direct Cost to curb the negative effect they have on Net Asset Value of the firm.  Furthermore, improvement in Net Asset Value per Share supports vital strategies that will maximize Financing Cost.