Effect of Leverage on the Profitability of Nigerian Consumer Goods Manufacturing Firms

Abdul-Azeez Alao and Wasiu Abiodun Sanyaolu ()
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Wasiu Abiodun Sanyaolu: Department of Accounting, Crescent University, Abeokuta, Ogun State, Nigeria

Business & Management Compass, 2020, issue 1, 5-25

Abstract: This study examined the effect of leverage on the profitability of Nigerian manufacturing firms based on the data of seventeen (17) Nigerian consumer goods firms listed on the Nigerian Stock Exchange for the period of 2012 to 2017. The study adopted the dynamic panel model. The main finding of the study revealed that leverage has a significant positive effect on profitability with p-value of 0.0000. The study therefore recommended that companies in the Nigerian consumer goods industry should take advantage of debts’ tax shield from the interest in their financial structure in order to improve their profitability level.

Keywords: Degree of operating leverage; Degree of financial leverage; Degree of combined leverage; Earnings per Share (search for similar items in EconPapers)
JEL-codes: G32 M41 (search for similar items in EconPapers)
Date: 2020
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