Capital Structure and Firm Performance in Nigerian-Listed Companies

Matthew Adeolu Abata · Stephen Oseko Migiro

17 citations0/0 files storedJournal of Economics and Behavioral Studies

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Corporate Finance and Governance Financial Analysis and Corporate Governance Working Capital and Financial Performance

Abstract

a number of business failures have not been reported in Nigeria arising from inability to payback nor does service debts .This paper empirically investigate the relationship between capital structure and firm performance in the Nigerian listed firms. A sample of 30listed firms out of a population of 173 were examined from 2005 to 2014 using multiple regression tools. Two hypotheses were formulated and tested using descriptive statistics and an econometric panel data technique to analyze the gathered data. An insignificantly negative correlation was found between financial leverage and ROA on one hand and a significantly negative relationship between debt/equity mix and ROE on the other hand. It is therefore recommended that firms should use long term liabilities to finance firm’s activities and mix debt/equity appropriately by ensuring that debt financing ratio is lower to enhance corporate performance and survival.

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1976Theory of the firm: Managerial behavior, agency costs and ownership structure 1958The Cost of Capital, Corporation Finance and the Theory of Investment 2008The cost of capital, corporation finance and the theory of investment 1984The Capital Structure Puzzle 1995What Do We Know about Capital Structure? Some Evidence from International Data 1963CORPORATE INCOME TAXES AND THE COST OF CAPITAL: A CORRECTION 2001The theory and practice of corporate finance: evidence from the field 1995Likelihood-Based Inference in Cointegrated Vector Autoregressive Models

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