An Empirical Analysis of the Determinants of Corporate Debt Policy of Nigerian Firms
B. I. Ehikioya
Additional contact information
B. I. Ehikioya: Financial Studies Department, Faculty of Management Sciences, National Open University of Nigeria
International Journal of Economics and Financial Research, 2018, vol. 4, issue 6, 180-187
Corporate debt policy remained a significant, but a challenging decision for managers entrusted with the responsibility to improve the value of the firm. Thus, this study examines the factors influencing the capital structure decisions of firms in Nigeria. The study employs a panel data regression model to analyze data from firms in Nigeria for the period 2011 to 2015. The result of the empirical analysis reveals that firms in Nigeria have a preference to finance economic operations from retained earnings and the use of short-term debt on rollover basis. The finding of this study confirms that debt decreases with profitability and growth opportunities. The findings show that asset tangibility and firm size have a positive and significant relationship with debt policy of firms in Nigeria. The analysis also reveals that managerial ownership has a negative and significant relationship with debt ratio of firms in Nigeria. The study shows a non-significant positive relationship between non-debt tax shields and debt. The study demonstrates that the trade-off and pecking order theories both explains the factors influencing capital structure decisions of firms in Nigeria. Therefore, this study suggests the need for stakeholders to develop the financial markets and make it accessible for firms to obtain long-term financing for economic growth and development.
Keywords: Capital structure; Nigeria stock exchange; Developing economies; Profitability; Growth; Debt; Trade-offs; Pecking order; Financial decisions, Ownership. (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:arp:ijefrr:2018:p:180-187
Access Statistics for this article
International Journal of Economics and Financial Research is currently edited by Dr. Abu Hassan Bin Md Isa
More articles in International Journal of Economics and Financial Research from Academic Research Publishing Group Rahim Yar Khan 64200, Punjab, Pakistan.
Bibliographic data for series maintained by Managing Editor ().