Firm Capital Structure and Financial Sector Performance in Nigeria

Michael Asiedu

doi:doi:10.11648/j.eco.20211004.12

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Firm Capital Structure and Financial Sector Performance in Nigeria

Michael Asiedu

Published in Economics (Volume 10, Issue 4)

Received: 9 October 2021 Accepted: 9 November 2021 Published: 25 November 2021

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Abstract

This study employed the two-step systems GMM and fixed-effect model to examine the relative importance and explanatory power of six (6) variables in considering the capital structure of 36 non-financial companies listed on the Nigeria Stock Exchange from 2008-2019. The study also examined the effect of the rule of law, institutional quality, macroeconomic management, financial sector performance, and accountability and corruption on firm capital structure. The findings of the study affirm' the theoretical underpinnings of the pecking order theory in Nigeria. The study finds that profitability and Liquidity ratios are negatively associated with debt ratios among non-financial firms in Nigeria. Firm size and tangibility of firm assets positively affect the debt ratio of these firms. The study also concludes that the rule of law, macroeconomic management, financial sector performance, accountability, and corruption indeed matter in determining firm financing mix in Nigeria. Indeed, the rule of law, financial sector rating, accountability, and corruption forms the fundamental basis for the enforcement of contracts, registration, and protection rights. The study provides evidence to the effect that these variables are critical for both equity and debt financing. This study adds to the existing literature as all the determinants used in the study are statistically significant in determining the capital structure of non-financial firms in Nigeria.

Published in	Economics (Volume 10, Issue 4)
DOI	10.11648/j.eco.20211004.12
Page(s)	112-124
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2021. Published by Science Publishing Group

Keywords

Leverage Ratio, Profitability Ratio, Liquidity Ratio, Tangibility, Asset Turnover Ratio

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APA Style

Michael Asiedu. (2021). Firm Capital Structure and Financial Sector Performance in Nigeria. Economics, 10(4), 112-124. https://doi.org/10.11648/j.eco.20211004.12

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ACS Style

Michael Asiedu. Firm Capital Structure and Financial Sector Performance in Nigeria. Economics. 2021, 10(4), 112-124. doi: 10.11648/j.eco.20211004.12

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AMA Style

Michael Asiedu. Firm Capital Structure and Financial Sector Performance in Nigeria. Economics. 2021;10(4):112-124. doi: 10.11648/j.eco.20211004.12

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@article{10.11648/j.eco.20211004.12,
  author = {Michael Asiedu},
  title = {Firm Capital Structure and Financial Sector Performance in Nigeria},
  journal = {Economics},
  volume = {10},
  number = {4},
  pages = {112-124},
  doi = {10.11648/j.eco.20211004.12},
  url = {https://doi.org/10.11648/j.eco.20211004.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.eco.20211004.12},
  abstract = {This study employed the two-step systems GMM and fixed-effect model to examine the relative importance and explanatory power of six (6) variables in considering the capital structure of 36 non-financial companies listed on the Nigeria Stock Exchange from 2008-2019. The study also examined the effect of the rule of law, institutional quality, macroeconomic management, financial sector performance, and accountability and corruption on firm capital structure. The findings of the study affirm' the theoretical underpinnings of the pecking order theory in Nigeria. The study finds that profitability and Liquidity ratios are negatively associated with debt ratios among non-financial firms in Nigeria. Firm size and tangibility of firm assets positively affect the debt ratio of these firms. The study also concludes that the rule of law, macroeconomic management, financial sector performance, accountability, and corruption indeed matter in determining firm financing mix in Nigeria. Indeed, the rule of law, financial sector rating, accountability, and corruption forms the fundamental basis for the enforcement of contracts, registration, and protection rights. The study provides evidence to the effect that these variables are critical for both equity and debt financing. This study adds to the existing literature as all the determinants used in the study are statistically significant in determining the capital structure of non-financial firms in Nigeria.},
 year = {2021}
}

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TY  - JOUR
T1  - Firm Capital Structure and Financial Sector Performance in Nigeria
AU  - Michael Asiedu
Y1  - 2021/11/25
PY  - 2021
N1  - https://doi.org/10.11648/j.eco.20211004.12
DO  - 10.11648/j.eco.20211004.12
T2  - Economics
JF  - Economics
JO  - Economics
SP  - 112
EP  - 124
PB  - Science Publishing Group
SN  - 2376-6603
UR  - https://doi.org/10.11648/j.eco.20211004.12
AB  - This study employed the two-step systems GMM and fixed-effect model to examine the relative importance and explanatory power of six (6) variables in considering the capital structure of 36 non-financial companies listed on the Nigeria Stock Exchange from 2008-2019. The study also examined the effect of the rule of law, institutional quality, macroeconomic management, financial sector performance, and accountability and corruption on firm capital structure. The findings of the study affirm' the theoretical underpinnings of the pecking order theory in Nigeria. The study finds that profitability and Liquidity ratios are negatively associated with debt ratios among non-financial firms in Nigeria. Firm size and tangibility of firm assets positively affect the debt ratio of these firms. The study also concludes that the rule of law, macroeconomic management, financial sector performance, accountability, and corruption indeed matter in determining firm financing mix in Nigeria. Indeed, the rule of law, financial sector rating, accountability, and corruption forms the fundamental basis for the enforcement of contracts, registration, and protection rights. The study provides evidence to the effect that these variables are critical for both equity and debt financing. This study adds to the existing literature as all the determinants used in the study are statistically significant in determining the capital structure of non-financial firms in Nigeria.
VL  - 10
IS  - 4
ER  -

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Author Information

Michael Asiedu

School of Finance, Zhongnan University of Economics and Law, Wuhan, China

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Plain Text BibTeX RIS

APA Style

Michael Asiedu. (2021). Firm Capital Structure and Financial Sector Performance in Nigeria. Economics, 10(4), 112-124. https://doi.org/10.11648/j.eco.20211004.12

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ACS Style

Michael Asiedu. Firm Capital Structure and Financial Sector Performance in Nigeria. Economics. 2021, 10(4), 112-124. doi: 10.11648/j.eco.20211004.12

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AMA Style

Michael Asiedu. Firm Capital Structure and Financial Sector Performance in Nigeria. Economics. 2021;10(4):112-124. doi: 10.11648/j.eco.20211004.12

Copy | Download

@article{10.11648/j.eco.20211004.12,
  author = {Michael Asiedu},
  title = {Firm Capital Structure and Financial Sector Performance in Nigeria},
  journal = {Economics},
  volume = {10},
  number = {4},
  pages = {112-124},
  doi = {10.11648/j.eco.20211004.12},
  url = {https://doi.org/10.11648/j.eco.20211004.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.eco.20211004.12},
  abstract = {This study employed the two-step systems GMM and fixed-effect model to examine the relative importance and explanatory power of six (6) variables in considering the capital structure of 36 non-financial companies listed on the Nigeria Stock Exchange from 2008-2019. The study also examined the effect of the rule of law, institutional quality, macroeconomic management, financial sector performance, and accountability and corruption on firm capital structure. The findings of the study affirm' the theoretical underpinnings of the pecking order theory in Nigeria. The study finds that profitability and Liquidity ratios are negatively associated with debt ratios among non-financial firms in Nigeria. Firm size and tangibility of firm assets positively affect the debt ratio of these firms. The study also concludes that the rule of law, macroeconomic management, financial sector performance, accountability, and corruption indeed matter in determining firm financing mix in Nigeria. Indeed, the rule of law, financial sector rating, accountability, and corruption forms the fundamental basis for the enforcement of contracts, registration, and protection rights. The study provides evidence to the effect that these variables are critical for both equity and debt financing. This study adds to the existing literature as all the determinants used in the study are statistically significant in determining the capital structure of non-financial firms in Nigeria.},
 year = {2021}
}

Copy | Download

TY  - JOUR
T1  - Firm Capital Structure and Financial Sector Performance in Nigeria
AU  - Michael Asiedu
Y1  - 2021/11/25
PY  - 2021
N1  - https://doi.org/10.11648/j.eco.20211004.12
DO  - 10.11648/j.eco.20211004.12
T2  - Economics
JF  - Economics
JO  - Economics
SP  - 112
EP  - 124
PB  - Science Publishing Group
SN  - 2376-6603
UR  - https://doi.org/10.11648/j.eco.20211004.12
AB  - This study employed the two-step systems GMM and fixed-effect model to examine the relative importance and explanatory power of six (6) variables in considering the capital structure of 36 non-financial companies listed on the Nigeria Stock Exchange from 2008-2019. The study also examined the effect of the rule of law, institutional quality, macroeconomic management, financial sector performance, and accountability and corruption on firm capital structure. The findings of the study affirm' the theoretical underpinnings of the pecking order theory in Nigeria. The study finds that profitability and Liquidity ratios are negatively associated with debt ratios among non-financial firms in Nigeria. Firm size and tangibility of firm assets positively affect the debt ratio of these firms. The study also concludes that the rule of law, macroeconomic management, financial sector performance, accountability, and corruption indeed matter in determining firm financing mix in Nigeria. Indeed, the rule of law, financial sector rating, accountability, and corruption forms the fundamental basis for the enforcement of contracts, registration, and protection rights. The study provides evidence to the effect that these variables are critical for both equity and debt financing. This study adds to the existing literature as all the determinants used in the study are statistically significant in determining the capital structure of non-financial firms in Nigeria.
VL  - 10
IS  - 4
ER  -

Copy | Download