Proponents believe that increase in cash flows could potentially increase the stock returns of consumer goods firms quoted in Nigeria Stock Exchange while opponents argue and equally criticize that fact. Hence, this study examined the effects of cash flow on stock returns of consumer goods firms for a period of 2010-2019. The study was anchored on agency theory. Panel data were gotten from the Nigerian Stock Exchange (NSE) and the data collected were analyzed using multiple regression analysis. The findings revealed Cash flows from operating activities has no significant effect on stock returns of consumer goods firms in Nigeria, cash flow from investing activities does not have significant effect on the stock returns of consumer goods firms in Nigeria, Cash flows from financing activities has no significant effect on stock returns of consumer goods firms in Nigeria, Free cash flow has positive and significant effect on stock returns of consumer goods firms in Nigeria. On the basis of the findings of the study, it was recommended among others that there is need for consumer goods industry to improve on their operating cash flow by making money available for this purpose for the general benefit of the economy. The management should embark on effective intermediation drive which will provide deep source of fund for this industry. Government should adopt a viable policy that will enable this industry to expand their scope of business and firm size of this industry should be improved. The study also revealed that if free cash flow will be well managed, it will affect the stock returns policy of a firm positively.
Operating activities, Investing, Financing activities and Stock returns
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