Capital Structure and Financial Performance: Panel Evidence from Quoted Manufacturing Firms in Nigeria (2011–2020)

Abstract:

In literature, there is a divided view on capital structure and financial performance which necessitated the examination of a panel evidence from selected quoted manufacturing firms in Nigeria. Data set were gathered from annual reports of 14 selected quoted manufacturing firms from 2011 to 2020. The data were analysed via panel full least square multiple regression technique as four hypotheses were tested while the outcome of the regression analysis gave acceptance of the second hypothesis in its null state declaring statistical link between total debt to total equity and return on assets of manufacturing entities in Nigeria. However, the findings were on the rejection side of the first, third and fourth hypotheses relating to total debt, long term debt, and short term debt to total assets. In light of the findings, it is suggested that Management of manufacturing corporations that are active on the stock market should strive to increase their long term debt to total assets so as to improve their business operations and by extension, their financial performance. This recommendation is in alignment with the findings of this study, which established that there is a beneficial link between capital structure and financial performance.