Impact of Cash flow on Investment levels in quoted Nigerian Manufacturing Firms.

This study examines the effect of cash flow on investment levels of quoted manufacturing firms in Nigeria. The objective is to identify if investment is sensitive to internally generated cash flow. The assessment covers the investment levels of 16 listed firms over the period 2004-2008. The OLS results of the study show a significant positive relationship between investment and cash flow, suggesting that investment is affected by the availability of internal finance. The study established that firm size text has significant negative effect on cash flow-investment relationship. The results also show that the industrial classification have varying effect on cash flow-investment relationship. While chemical and paints and building materials have positive effect on investment-cash flow relationship, conglomerates, food, beverages and tobacco have negative effect on the relationship between internally generated funds and investment. However, only chemical and paints had a significant positive effect on the cash flow-investment nexus. Thus, the study establishes among others that investment levels of firms can be affected by the availability of internal finance and industry type and that a misalignment of investment with internal / characteristic factors can be detrimental. Keywords: Cash flow, Investment, Industr