Abstract
The study investigates the impact of operating expenses on the financial performance of listed oil and gas firms in Nigeria. A persistent concern in the Nigerian oil and gas sector is the inefficient allocation of operational costs, which may hinder profitability and sustainability. Thus, the objective of this study is to examine how different components of operating expenses—administrative costs, selling costs, and distribution costs—along with firm size, influence financial performance. The study employed secondary data extracted from the annual reports and financial statements of five (5) randomly selected oil and gas firms listed on the Nigerian Exchange Group for the period 2012 to 2021. The analysis was carried out using panel regression techniques, specifically fixed and random effects models, guided by the Hausman specification test. The findings reveal that administrative cost (? = 0.432, p < 0.05), distribution cost (? = 0.287, p < 0.05), and firm size (? = 0.218, p < 0.05) have positive and statistically significant effects on financial performance. However, selling cost (? = -0.174, p < 0.05) exhibits a negative and statistically significant relationship, indicating mismanagement or poor utilization of this expense category. The study concludes that administrative and distribution expenses, as well as firm size, positively enhance financial performance, while ineffective management of selling costs impairs it. The study recommends that selling costs be tightly controlled and efficiently managed to improve financial performance, rather than hinder the financial viability of these firms.
Keywords
Administrative Cost, Distribution Cost, Financial Performance, Firm Size, Oil and Gas Sector, Operating Expenses, Selling Cost
Citations
IRE Journals:
Akinleye G. T , Olatunji Opefolu francis
"Operating Efficiency and Financial Performance on Nigerian Oil and Gas" Iconic Research And Engineering Journals Volume 9 Issue 1 2025 Page 796-804
IEEE:
Akinleye G. T , Olatunji Opefolu francis
"Operating Efficiency and Financial Performance on Nigerian Oil and Gas" Iconic Research And Engineering Journals, 9(1)
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