Capital Structure and Agency Costs

Gborogen Adogbeji and Ohidoa Toluwa
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Gborogen Adogbeji: Department of Accounting, Faculty of Management, University of Benin
Ohidoa Toluwa: Department of Accounting, Faculty of Management Sciences, University of Benin

International Journal of Research and Innovation in Social Science, 2023, vol. 7, issue 4, 431-438

Abstract: Capital structure and agency cost. Objectives: The study empirically investigates the relationship between capital structure and agency cost of non-financial firms. Prior Work: This extended and build on the studies of Hajis said (2020) and Omuemu and Olowe (2020); Kumar (2017); Awan and Amin (2014); Jaelani (2017) and Zakaria (2016) that also research in the same direction of our study. Approach: this study adopted a longitudinal research design and the Ordinary Least Square method of data analysis. Results: The study showed that total debt to equity ratio and long term debt to asset ratio have a negative and significant relationship with agency cost, whereas short-term debt to asset ratio, long term debt to equity ratio, and equity to assets ratio have a positive and significant relationship with agency cost. Implication: the study has ushered prospective and existing investors and organizations, the knowledge of the relevance of short and long term debts to agency cost Nigeria. Value: the demonstrated that the ratio of short-term debt to assets has a positive and significant effect on agency.

Date: 2023
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