 The impact of profitability on capital structure and speed of adjustment: An empirical examination of selected firms in Nigerian Stock ExchangeIsaiah Oino and Ben Ukaegbu Research in International Business and Finance, 2015, vol. 35, issue C, 111-121 Abstract: The aim of the study was to investigate the impacts of capital structure on the performance of Nigerian listed non-financial firms and how these firms adjust to the target capital structure. We tested the Trade-off theory and the pecking order theory and the relevance of these theories to Nigerian firms is confirmed. The speed of adjustment to the target capital structure is determined using both pool OLS and GMM to ensure the robustness of the finding. The descriptive statistics show that leverage constitute 63% of the capital structure of Nigerian firms, while leverage is dominated with the short term leverage. We observed that profitability and asset structure were negatively related to leverage while the size of the firm and non-debt tax shield were positively related to leverage. The adjustment speed of Nigerian firms is very high 47% that compares well with studies on non-financial firms done in most developed countries. Keywords: Leverage; Performance; Target capital structure; Adjustment speed (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:35:y:2015:i:c:p:111-121 DOI: 10.1016/j.ribaf.2015.03.004 Access Statistics for this article Research in International Business and Finance is currently edited by T. Lagoarde Segot More articles in Research in International Business and Finance from Elsevier |
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