Does Capital Structure Enhance Firm Performance? Evidence from Nigeria PDF Download
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Author: Taiwo Muritala
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The relationship between capital structure and firm performance has received considerable attention in finance literature. This study examines the impact of capital structure on performance of some selected manufacturing companies in Nigeria using the annual data of five firms for a period of eleven years (2002-2012). The study hypothesizes a negative relationship between capital structure and firm performance measured in terms of return on equity and return on investment. However, the results of Panel Least Square (PLS) regression confirm that debt ratio, asset turnover and size of the firm are positively related to firm performance, while evidence of a negative and significant relationship is found between asset tangibility and measures of firm performance in the model. This implies that the sampled firms are not able to utilize the fixed asset of their total assets judiciously to impact positively their performance. Hence, it is suggested that although asset tangibility shows a negative relationship with both the performance indicators, it should be considered as a driving factor to capital structure because firms with more tangible assets are less likely to be financially constrained. Finally, the results show that growth fails to have a significant effect on either of the performance indicators.
Author: Taiwo Muritala
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The relationship between capital structure and firm performance has received considerable attention in finance literature. This study examines the impact of capital structure on performance of some selected manufacturing companies in Nigeria using the annual data of five firms for a period of eleven years (2002-2012). The study hypothesizes a negative relationship between capital structure and firm performance measured in terms of return on equity and return on investment. However, the results of Panel Least Square (PLS) regression confirm that debt ratio, asset turnover and size of the firm are positively related to firm performance, while evidence of a negative and significant relationship is found between asset tangibility and measures of firm performance in the model. This implies that the sampled firms are not able to utilize the fixed asset of their total assets judiciously to impact positively their performance. Hence, it is suggested that although asset tangibility shows a negative relationship with both the performance indicators, it should be considered as a driving factor to capital structure because firms with more tangible assets are less likely to be financially constrained. Finally, the results show that growth fails to have a significant effect on either of the performance indicators.
Author: Mohammed Kakanda
Publisher:
ISBN:
Category :
Languages : en
Pages : 9
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Book Description
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: Ahmed Riahi-Belkaoui
Publisher: Praeger
ISBN:
Category : Business & Economics
Languages : en
Pages : 238
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Book Description
This text uses theoretical and contingency approaches to examine the question of whether capital structure can be determined. Using a bond rating model it looks at the evaluation of capital structure, the resolution of issues pertaining to equity and liabilities, and their contribution to reports
Author: Olumuyiwa Yinusa
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author: Leora Klapper
Publisher: World Bank Publications
ISBN:
Category : Business law
Languages : en
Pages : 60
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Book Description
"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.
Author:
Publisher: GRIN Verlag
ISBN: 334655063X
Category : Business & Economics
Languages : de
Pages : 67
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Book Description
Studienarbeit aus dem Jahr 2020 im Fachbereich BWL - Bank, Börse, Versicherung, , Sprache: Deutsch, Abstract: The study examines the impact of capital structure on the profitability of Nigerian quoted insurance companies with specific emphasis on AIICO Plc which is one of the 15 quoted insurance companies in Nigeria. The scope covers the period of ten (10) years (2010 to 2020). AIICO PLC was selected based on the criteria of data availability. The study assists financial managers of firms to determine the proportion of equity capital and debt capital (capital structure) to obtain the debt financing mix that will optimize the value of the firm. This study, therefore, has contributed to the literature by examining capital structure and profitability of Nigerian quoted insurance companies. The study aids in the understanding of the impact of capital structure on insurance profitability. This has helped us to understand the impact of capital structure in profitability of Nigeria quoted insurance companies. The outcome from this study will help decisions on capital structure and allow the policy makers in formulating informed policies on capital structure and also to measure the implications of such policies on the operations of quoted insurance companies. This will go a long way in helping investors in deciding whether to pull out their share in pursuance of capital gains or preserve their stake in a corporation. The study will contribute to existing body of knowledge by investigating capital structure and profitability of Nigerian quoted insurance companies.
Author: Samson Olaniyan
Publisher:
ISBN:
Category :
Languages : en
Pages : 32
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Book Description
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: Ronald W. Masulis
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 168
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Book Description
Author: Krishna Dayal Pandey
Publisher: Taylor & Francis
ISBN: 100092498X
Category : Business & Economics
Languages : en
Pages : 150
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Book Description
This book provides empirical insights into the relationship between capital and equity-ownership structure of Indian manufacturing companies and their financial performance. It discusses and analyses the basic theories and concepts associated with capital structure, debt financing, levered and unlevered firms, the various forms of ownership, agency problem and its kind and the exploitation of minority owners by the large and largest owners. The study employs a set of the most reliable and suitable econometric estimation techniques to draw meaningful inferences on the Indian manufacturing sector. The novelty of this book lies in three particular aspects: the depth and dimension with which the topic is addressed; the robust empirical evidence that it has produced and the simple and intelligible approach with which it is authored. It communicates the crucial relevance of corporate capital structure and equity-ownership to the moderation of agency relationship and shaping the internal governance mechanism, which ultimately results in increased or decreased operational efficiency and financial performance. It will enable readers to understand whether an increased amount of debt capital would bring about positive results for firms or create an extra burden on the management of their finances, preventing them from taking productive investment decisions due to the threat of liquidation. The book will find an audience among advanced students, scholars and researchers who are interested in understanding the corporate finance practices and governance mechanism of Indian organizations.
Author: Dan Remenyi
Publisher: SAGE
ISBN: 9780761959502
Category : Business & Economics
Languages : en
Pages : 320
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Book Description
Doing Research in Business and Management has been written to help students obtain a thorough understanding of the main methodological issues and options that are available to them as business and management researchers undertaking a masters or doctoral degree. Doing Research in Business and Management takes the reader through all of the important issues that need to be understood if a competent piece of research is to be produced at the masters or doctoral level in the business and management studies. The authors explain the interrelationship between the theoretical and empirical research as well as the differences between positivism and phenomenology. Not only do they put these concepts in context for the business and management student, but they go on to discuss how these different approaches are used in practice. Furthermore, the authors discuss the implications of quantitative and qualitative approaches to research. The book offers high-level advice on different numerical techniques available to researchers as well as different software packages that may be used for analyzing qualitative data. The book also discusses the use of the Internet to support research in masters and doctoral programs.
