Lease Arrangements and Financial Performance of Breweries in Nigeria

Abstract

This study investigates the relationship between lease arrangements and the financial performance of breweries listed on the Nigerian Stock Exchange. Using an ex-post facto research design, and a study period of ten years (2008 – 2017), the study analysed data on earnings per share and net assets per share of four breweries in Nigeria. A comparison of the performance of selected firms based on the nature of lease arrangements and the intensity of involvement in leasing transactions, using t-statistics, showed that firms that engaged in diversified lease arrangements performed better than those that implemented only one form of lease arrangement; and firms that were more actively involved in lease arrangements were better in both earnings per share and net assets per share than firms that were less active in lease transactions. Accordingly, it is recommended that listed breweries should consider the benefits available in lease financing and should more actively engage in beneficial lease arrangements.

Keywords: operating lease, finance lease, lease arrangements, earnings per share, net assets per share, breweries