Effect Of Capital Structure On The Performance Of Listed Consumer Goods Companies In Nigeria
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| Author | : Mohammed Kakanda |
| Publisher | : |
| Total Pages | : 9 |
| Release | : 2016 |
| Genre | : |
| ISBN | : |
Managers of corporate entities are mostly in confrontation with the problem of; what combination of capital structure (equity and debt) will maximize returns and value of their firms? The study, therefore, aims at assessing the effect of capital structure on the financial performance of listed Consumer goods companies in Nigerian. All consumer goods companies quoted on the Nigerian Stock Exchange are considered the population for this study while seven (7) out of these firms whose accounting year-ends 31 December are considered as the sample. Secondary data was utilized from the annual financial reports of the sampled firms from the year 2008-2013, which was obtained from African Financial website and official website of Nigerian Stock Exchange. The study used ex-post facto research design to examine the relationship between independent and dependent variables while controlling for other variables. Descriptive statistics, correlation, and hierarchical multiple regression analyzes were carried out to test the hypotheses developed in the study. The study found that there is a positive and significant relationship between firm's capital structure and corporate financial performance. The study specifically found that short-term debt (STD) has no significance positive effect on return on equity (ROE) while Long-term debt (LTD) has positive relation and significant effect on ROE. The study recommends that firms should consider the mixture of equity and debt since they are major determinants of corporate performance. Authorities concerned should create an enabling business environment for companies (especially those with low capital) so as to have access to long-term debts to finance their operations and improve performance in the shortrun, instead of using high short-term debts to cushions for financing and profitability problems.
| Author | : Felix Echekoba |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2019 |
| Genre | : |
| ISBN | : |
This study assesses the effect of financial structure on performance of consumer goods firms quoted in Nigerian Stock Exchange. In this study, twenty three (23) out of the twenty seven (27) firms were randomly chosen for the period 1993 to 2013. The study applied earnings per share and return on equity as performance indices. To add to this, total debt to total equity ratio, short term debt to total equity ratio were adopted to measure financial structure while tangibility, firm size, growth and risk were included as control variables capable of influencing performance. The effect of financial structure on performance was analysed using pooled ordinary least square, fixed effect and random effect regression technique. The results of the analysis divulged that financial structure represented by total debt to total equity ratio and short term debt to total equity ratio, negatively affect financial performance of consumer goods firms measured by earnings per share and return on equity. The negative effect of financial structure variables: total debt to total equity ratio and short term debt to total equity ratio tends to buttress that as result of agency conflict, performance of firms that are highly geared are negatively affected. The findings also were in conformity with the proposition of the pecking order theory that firm performance and financial structure are negatively correlated. This study concludes that financial structure has negative effect on financial performance of Nigeria consumer goods firms. In the light of this, we suggests that firm's management should established a debt-equity mix capable of improving financial performance notwithstanding the proxy adopted for assessing performance. Over investment in fixed assets should be discontinued and effective and efficient utilization of fixed assets vehemently upheld.
| Author | : Okolie Ugochukwu Jude |
| Publisher | : GRIN Verlag |
| Total Pages | : 45 |
| Release | : 2022-12-07 |
| Genre | : Business & Economics |
| ISBN | : 3346775356 |
Academic Paper from the year 2021 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 4.5, Ahmadu Bello University, language: English, abstract: This paper analyzes the effect of financial leverage on firms’ performance. The aim was to study the implications of financial leverage on firms performances. Also considering that maximizing accounting profit and maximizing shareholders value are not identical because of shareholders losses from agency costs, it was therefore pertinent to see how capital structure affect shareholders value. The objective of the study was to identify the possible effects of financing leverage on the performance of the company, to establish the relationship between leverage and corporate performance of listed firms in Nigeria, to determine the extent to which capital structure affect shareholders returns, to determine when the shareholder’s wealth can be said to have been maximized given a particular capital structure and to analyze the debt and equity which might result in over capitalization of the firm. The research was designed to collect data through a survey method from five listed firms - Dangote Sugar Refinery, Nestle, Flour Mills, Cadbury, and Nigerian Breweries. Descriptive design (percentages) was used to explain the effect of financial leverage on company’s performance; while analytical design (correlational statistical method) was used to establish the relationship between financial leverage and corporate performance.
| Author | : |
| Publisher | : |
| Total Pages | : 39 |
| Release | : 2012 |
| Genre | : |
| ISBN | : |
| Author | : Oyesola Salawu |
| Publisher | : LAP Lambert Academic Publishing |
| Total Pages | : 192 |
| Release | : 2010-09 |
| Genre | : |
| ISBN | : 9783843350273 |
The study examined the effects of financial risk, firms' characteristics and macroeconomic factors on the capital structure and the rate at which firms adjust towards their target capital. Secondary annual panel data for the period of 1990 to 2006 using 70 non-financial listed companies for analysis were employed. Data were sourced from the Annual Report and Accounts of the sampled firms and the publications of Central Bank of Nigeria. Descriptive method and Generalized Method of Moment (GMM) were used to analyze data. The results indicate a positive coefficient between financial risk and capital structure and those Nigerian companies with higher financial risk tend to use more short-term debt in general. Also, profitability, tangibility, corporate tax rate, age of the firm, earning power, volatility, inflation and foreign direct investment, have significantly positive effects on capital structure. In addition, thirty-eight firms adjust fully to their target capital, while thirty-two over adjust. The study concluded that effective financial risk management and good financing policy decision would greatly improve firms' performance in Nigeria.
| Author | : Samson Olaniyan |
| Publisher | : |
| Total Pages | : 32 |
| Release | : 2015 |
| Genre | : |
| ISBN | : |
This paper examines the effects of capital structure on performance of quoted non-financial firms in Nigeria between 1996 and 2014. The study employed both the first and second generation econometrics method of panel unit root test, principal component analysis, and Generalized Method of Moments. Using return on assets returns on equity, price earnings ratio, Tobin's Q, and constructed Performance Index as measures of firm performance and debt ratio as a measure of capital structure. Our result showed that capital structure has a negative and significant relationship with firm performance. The study concluded that the agency cost of the non-financial firms under the Nigerian Stock Exchange is very high and this leads to negative performance.
| Author | : Yisau Abiodun Babalola |
| Publisher | : LAP Lambert Academic Publishing |
| Total Pages | : 108 |
| Release | : 2013-01 |
| Genre | : |
| ISBN | : 9783659324307 |
Survival of firms depends largely on improved performance but several factors both internal and external have culminated to influence the performance of firms. External factors include the poor macroeconomic and political environment of doing business while internal factors include poor corporate governance, lack of adequate capital and poor capital structure choice etc. Capital structures remain a strong factor driving the performance of firms; several firms had collapsed due to poor financial structure decisions. The results of the study are deemed to benefit the following primary users; external investors and shareholders who will be able to know how the capital structure of firms affects their performance and guide in making investment decisions. Professional manager would be better guided on how to achieve the company's objectives. Lenders may find the results useful in evaluating the firms' performance before giving loans and academicians will see new empirical evidence particularly in the finance literature emanating from an emerging economy like Nigeria.
| Author | : Yamini Agarwal |
| Publisher | : John Wiley & Sons |
| Total Pages | : 208 |
| Release | : 2013-03-29 |
| Genre | : Business & Economics |
| ISBN | : 111820316X |
Inside the risk management and corporate governance issues behind capital structure decisions Practical ways of determining capital structures have always been mysterious and riddled with risks and uncertainties. Dynamic paradigm shifts and the multi-dimensional operations of firms further complicate the situation. Financial leaders are under constant pressure to outdo their competitors, but how to do so is not always clear. Capital Structure Decisions offers an introduction to corporate finance, and provides valuable insights into the decision-making processes that face the CEOs and CFOs of organizations in dynamic multi-objective environments. Exploring the various models and techniques used to understand the capital structure of an organization, as well as the products and means available for financing these structures, the book covers how to develop a goal programming model to enable organization leaders to make better capital structure decisions. Incorporating international case studies to explain various financial models and to illustrate ways that capital structure choices determine their success, Capital Structure Decisions looks at existing models and the development of a new goal-programming model for capital structures that is capable of handling multiple objectives, with an emphasis throughout on mitigating risk. Helps financial leaders understand corporate finance and the decision-making processes involved in understanding and developing capital structure Includes case studies from around the world that explain key financial models Emphasizes ways to minimize risk when it comes to working with capital structures There are a number of criteria that financial leaders need to consider before making any major capital investment decision. Capital Structure Decisions analyzes the various risk management and corporate governance issues to be considered by any diligent CEO/CFO before approving a project.
| Author | : Osuji Casmir Chinaemerem |
| Publisher | : |
| Total Pages | : 19 |
| Release | : 2012 |
| Genre | : |
| ISBN | : |
| Author | : Marcel Okeke |
| Publisher | : |
| Total Pages | : 26 |
| Release | : 2020 |
| Genre | : |
| ISBN | : |
The study examined the effect of capital structure on firm value of selected quoted firms in Nigeria. It adopted long term debt, equity capital, as independent (x) variables of capital structure while Tobin Q was used as proxy for firm value the dependent variable. It adopted ex-post facto research design. The statistical package used for the analysis was e-view version 8.0. The population of the study was firms drawn from conglomerate and consumer goods sectors of Nigeria Stock exchange for a period of nine (9) years 2007-2015. Descriptive statistics, correlation and ordinary least square (OLS) of multiple regression analysis were used to test the hypotheses formulated to guide the study. The coefficient of determination R2 showed that 65% systematic variations in firm value could be explained by the independent variables. The F value (62.44647) was significant at 1% which means that the parameters estimated were statistically significant in explaining the effect of the independent variables on the dependent variable. The study therefore, concluded that capital structure with regard to long term debt was negatively but statistically significant to firm value, while equity capital was positively insignificant to firm value. The study recommended that firms should be more concerned with management of equity capital in business financing since it is more related to the value of the firm.
