Capital Allowance : Captivating Nuance of Investment Incentives in the Nigerian Manufacturing Sector

Capital allowance is granted to attract and support investors in strategic productive sectors of an economy. This study examines the extent to which capital allowance serves as veritable captivating investment incentive to stakeholders in the Nigerian manufacturing sector. The corporate financial performance attractions considered are profit after tax (PAT), return on total assets (ROTA), and return on shareholders' equity (ROSE). Financial data accessed for analysis relate to 58 manufacturing firms quoted on the Nigerian Stock Exchange (NSE). Statistical results such as coefficients of correlation and determination emerging from the process justify the potency of capital allowance as it is significantly associated with PAT, ROTA and ROSE. In the light of the analytical revelations, it is imperative for accounting and finance executives in Nigerian manufacturing firms to professionally enumerate and profile their investments in qualifying industrial assets in accordance with extant tax guides in order to benefit from capital allowance grants. The attractiveness of financial economies of capital allowance notwithstanding, manufacturing sector investors should exercise restraint and avoid indiscriminate industrial asset requisition and expansion. Sensitivity to technological, managerial and relational dynamics is also imperative so that the captivating intents of capital allowance would not end up precipitating decapitating contents in the Nigerian economy