Cash Flow Quality and Financial Sustainability: A Contingency Perspective from an Emerging Market

Abstract
This study investigates the effect of disaggregated cash flow management on financial sustainability, with firm size as a moderator, among listed consumer goods firms in Nigeria. Using a balanced panel of 10 firms from 2016 to 2025, Panel EGLS with Cross-section SUR and Panel-Corrected Standard Errors is applied for Absolute Return on Assets [ABS(ROA)], while Random Effects is used for Tobin’s Q [TOBINQ]. Cash flow management is disaggregated into Operating Cash Flow Ratio [OCFR], Cash Flow Adequacy [CFA], and Cash Flow Efficiency [CFE]. Results show that CFA and OCFR significantly improve ABS(ROA), while CFE is insignificant. For TOBINQ, CFA and CFE have significant negative direct effects, while OCFR is positive at 10%. Firm size significantly moderates all three relationships, but the direction differs across sustainability proxies. The findings imply that cash flow quality drives profitability, but market valuation in Nigeria interprets high cash adequacy and efficiency negatively unless deployed by larger firms. The study extends the Pecking Order, Liquidity Preference, and Contingency theories, and provides guidance for managers and regulators.
Keywords: Cash flow management; Cash flow adequacy; Cash flow efficiency; Financial sustainability; Firm size, Nigeria

Management Accounting

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