Financial Risk and Capital Structure Choice in Nigeria

Financial Risk and Capital Structure Choice in Nigeria
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.

Capital Structure And Firms' Performance In Nigeria

Capital Structure And Firms' Performance In Nigeria
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.

Effect of Financial Leverage on Performance of Listed Firms in Nigeria

Effect of Financial Leverage on Performance of Listed Firms in Nigeria
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.

Business Risk and Capital Structure in Nigerian Listed Firms

Business Risk and Capital Structure in Nigerian Listed Firms
Author: Dauda Mohammed
Publisher: LAP Lambert Academic Publishing
Total Pages: 208
Release: 2011-04
Genre:
ISBN: 9783844334906

Nigeria has one of the most difficult business environments with poor infrastructure especially electricity, water and road network.Electricity supply in particular, coerces Nigerian companies to incur standby power generators.Consequntly the overheads of maintaining generators, fuel, spare parts increases their earnings volatility(business risk). To this end, corporate capital structure theories including the trade-off theory have suggested that higher levels of earnings uncertainty in a firm will increase the probability of financial distress and the chances of the company becoming bankrupt.This study is the first to consider the levrage effect of earnings volatility for a panel of ninety four Nigerian companies listed on the stock exchange of an oil depedent emerging economy.This understanding is important from the persepective of financial market structure, investments and government regulations. It will therefore provide a guide for financial theorists and professionals or anyone else who may be interested in utilizing a less complicated econometric and statistical models in analysing corporate financing decisions.

Determinants of Capital Structure of Nigerian Non-financial Firms

Determinants of Capital Structure of Nigerian Non-financial Firms
Author: Oyetade Abisoye Makinde
Publisher:
Total Pages: 0
Release: 2014
Genre: Business enterprises
ISBN:

"The research report presents empirical findings on the determinants of capital structure of selected sample population of non-financial firms of Nigeria. The study was based on quantitative research orientation, and descriptive research design. Secondary data was obtained from 2000-2012 Standard and Poor (S&P) Nigeria Stock Exchange’s twenty seven non-financial firms as sample population for the study. … Major research findings of the study revealed the impact of liquidity in the leverage of Nigerian non-financial firms as a result of institutional factors such as size, return, growth, tangibility, liquidity and dividend on firms’ impact and methods of financing. Also, the visibility of static Trade-off Theory as more constant in determining the wave of capital structures of Nigerian non-financial firms. The study concludes by reiterating that even though the selected firms used for the study is not a reflection of all the non-financial firms in Nigeria, however, it asserts that most Nigerian’s non-financial firms experience high leverage and dividend payments to investors (foreign and local) as well as experience low liquidity, which needs to be minimized of avoided. In sum, further empirical research is required, especially with the most recent data of S&P and Fitch’s (2014) global ratings of Nigeria’s economic performance as the leading economy in Africa (Chima, 2014)."--Leaf iii.

Capital Structure Decisions

Capital Structure Decisions
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.

Applied Corporate Finance

Applied Corporate Finance
Author: Aswath Damodaran
Publisher: John Wiley & Sons
Total Pages: 663
Release: 2014-10-27
Genre: Business & Economics
ISBN: 1118808932

Aswath Damodaran, distinguished author, Professor of Finance, and David Margolis, Teaching Fellow at the NYU Stern School of Business, has delivered the newest edition of Applied Corporate Finance. This readable text provides the practical advice students and practitioners need rather than a sole concentration on debate theory, assumptions, or models. Like no other text of its kind, Applied Corporate Finance, 4th Edition applies corporate finance to real companies. It now contains six real-world core companies to study and follow. Business decisions are classified for students into three groups: investment, financing, and dividend decisions.

The Theory of Finance

The Theory of Finance
Author: John D. Martin
Publisher: Harcourt Brace College Publishers
Total Pages: 746
Release: 1988
Genre: Business & Economics
ISBN:

Business Environment and Firm Entry

Business Environment and Firm Entry
Author: Leora Klapper
Publisher: World Bank Publications
Total Pages: 60
Release: 2004
Genre: Business law
ISBN:

"Using a comprehensive database of firms in Western and Eastern Europe, we study how the business environment in a country drives the creation of new firms. Our focus is on regulations governing entry. We find entry regulations hamper entry, especially in industries that naturally should have high entry. Also, value added per employee in naturally "high entry" industries grows more slowly in countries with onerous regulations on entry. Interestingly, regulatory entry barriers have no adverse effect on entry in corrupt countries, only in less corrupt ones. Taken together, the evidence suggests bureaucratic entry regulations are neither benign nor welfare improving. However, not all regulations inhibit entry. In particular, regulations that enhance the enforcement of intellectual property rights or those that lead to a better developed financial sector do lead to greater entry in industries that do more R & D or industries that need more external finance"--National Bureau of Economic Research web site.