Debt Financing Strategy and Dividend Pay-Out Strategy on Financial Performance: Evidence from Listed Multinational Companies in Nigeria

Ajose Oluwafemi, Prof. Solomon Aza and Dr. Lambe Isaac
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Ajose Oluwafemi: Department of Accounting, Bingham University, Karu, Nasarawa State.
Prof. Solomon Aza: Department of Accounting, Bingham University, Karu, Nasarawa State.
Dr. Lambe Isaac: Department of Accounting, Bingham University, Karu, Nasarawa State.

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 5, 1501-1518

Abstract: Empirical evidence suggests that over the last three years, more than fifteen multinational companies with a combined staff strength of over twenty thousand employees have either divested or partially closed operations in Nigeria. This has dire consequences not only on employees but also on government revenue. Thus, this study investigates the effect of debt financing strategy together with dividend payout strategy on the financial performance of listed multinational companies in Nigeria. The longitudinal panel research design was adopted with a population of all 32 listed multinational companies on the Nigerian exchange group as of 31st December 2024. The purposeful sampling technique was employed in selecting twenty-five (25) firms out of thirty-two (32) multinational companies in Nigeria for the 2012-2023 financial year. Secondary data from annual reports of listed multinational companies was collected, and Panel regression estimation was used for the analysis with the aid of E-views 13 statistical package. The finding revealed that debt financing percentage and dividend payout percentage have a positive and significant effect on the return on capital employed by listed multinational companies in Nigeria. The study concludes that debt financing strategy and dividend payout strategy have considerable effects on the financial performance of listed multinational companies in Nigeria. The study, therefore, recommends that the management of listed multinational companies in Nigeria should balance the quality of their capital structure through rational financing decisions because appropriate debt capacity and rational dividend payments offer the best advantage to the companies through maximizing return on capital employed.

Date: 2025
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