Vol. 10(2), pp. 31- 38, May 2022 , 2022.

ISSN: 2384-6151

https://doi.org/10.14662/ijebm2022080

 

 

Full Length Research

 

Capital Structure and Corporate Performance of Non-Financial Firms in Nigeria

 

1ENADEGHE Best Iyobor, 2AMANA Labija Yusuf and 3ALFA Mohammed Danlami

 

1Department of Banking and Finance, The Federal polytechnic Bida, Niger State.  

2Department of Accountancy, The Federal polytechnic Bida, Niger State.  

3Department of Social Sciences, The Federal polytechnic Bida, Niger State.  

Corresponding author's E-mail: enadeghebestiy@gmail.com, Tel. 08032112269

 

 

Accepted 28 April 2022

Abstract

 

This study examined the relationship between capital structure and corporate performance of listed non-financial firms in Nigeria. The study employs the panel data analysis technique using correlation research design. Four capital structure proxies (long term debt to equity, total debt to equity, total debt to total assets and long term debt to total assets) were tested against return on assets (ROA) of 27 listed non-financial firms in Nigeria for a period of eight (10) years (2011-2020). The results from the empirical analysis, based on the fixed effect strategy showed that, long term debt-to-equity, total debt-to-equity and total debt to total assets have significant positive relationship with corporate performance; while long term debt-to-total assets has a significant negative relationship with corporate performance. The study recommends among others that, since long term debt to equity is a significant determinant of corporate performance in Nigeria, management should sustain their current policies and should also be very sensitive in determining the appropriate amount of long term debt to equity that should be included in their capital structure build up. Also, total debt to equity which represents the firms’ leverage levels in Nigeria is significant and positively related to firms’ performance, it therefore follows that, policies that would encourage firms to employ more leverage (due to the tax shield benefits) while reducing equity financing in the operations of the firms activities should be vigorously pursued by management in this regard.

 

Keywords: Capital structure, Corporate performance, Debt, Equity, Assets, Non-financial firms.

 

Cite This Article As: ENADEGHE, B.I., AMANA L.Y., ALFA, M.D.(2022). Capital Structure and Corporate Performance of Non-Financial Firms in Nigeria. Inter. J. Econ. Bus. Manage.10(2): 31-38