Financial Leverage Behaviour and Firm Performance: Evidence from Publicly Quoted Companies in Nigeria

Godsday Okoro Edesiri ()
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Godsday Okoro Edesiri: Nnamdi Azikiwe University

Acta Universitatis Danubius. OEconomica, 2014, issue 10(4), 99-106

Abstract: This paper scrutinizes financial leverage behaviour and firm performance of publicly quoted companies in Nigeria. Data of Leverage, Profitability and Firm Size were sourced from the Nigerian Stock Exchange Fact-book and Annual Report and Accounts of 120 publicly quoted companies in Nigeria during the period 1990 through 2013. Findings suggest that profitability and firm size had a negative effect on financial leverage behaviour of publicly quoted companies in Nigeria. Thus, it was recommended that firms should carry out projects that would help enhance size and profitability in all aspect of the firm. Size in terms of assets would help increase the internal funding. This in turn will have a positive impact on the financial structure of firm as more of internally generated funds will be used instead of external borrowings. Firms should not assume that making of profit shows good application of leverage as this was not found to be true from the analysis. This implies that the result can be relied upon for policy direction

Keywords: financial leverage; firm performance; profitability; firm size (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:dug:actaec:y:2014:i:4:p:99-106

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