EFFECT OF CAPITAL STRUCTURE ON FINANCIAL PERFORMANCE OF BUILDING MATERIAL FIRMS IN NIGERIA

Onyeukwu, Oswald O. (), Okoro, C. Churchill and Nwachukwu, Michael I.
Additional contact information
Onyeukwu, Oswald O.: Department of Accounting, Faculty of Management Sciences, Postal: Michael Okpara University of Agriculture, Umudike, Abia, Nigeria., https://www.afarng.org/mjms/
Okoro, C. Churchill: Department of Accounting, Faculty of Management Sciences, Postal: Michael Okpara University of Agriculture, Umudike, Abia, Nigeria., https://www.afarng.org/mjms/
Nwachukwu, Michael I.: Department of Accounting, Faculty of Management Sciences, Postal: Gregory University, Uturu, Abia., https://www.afarng.org/mjms/

Multidisciplinary Journal of Management Sciences, 2021, vol. 3, issue 1, 87-112

Abstract: The study examined the effect of capital structure on financial performance of building material firms in Nigeria. The specific objectives of the study are; to examine the effect capital structure (EQT, LTD & STD) on financial return on asset of building material firms in Nigeria, to determine the effect of capital structure (EQT, LTD & STD) on return on equity of building material firms in Nigeria and to examine the effect of capital structure (EQT, LTD & STD) on earnings per share of building material firms in Nigeria.. To achieve the objectives of the study ex-post facto research design was adopted. Secondary data were generated from annual reports and accounts of building material companies. Data collected were analyzed using panel data regression analysis. The finding revealed that (i) there exists a positive significant effect of equity on return on assets of listed building material firms in Nigeria (ii) there exists a negative significant effect of equity on return on equity of listed building material firms in Nigeria and (iii) there exists a negative significant effect of equity on earnings per share of listed building material firms in Nigeria. The study recommends that building material firms should consider the need to ensure more equity capital combination on their financing decision. This should be done with due consideration of the cost of capital so as to reduce the negative effect of equity capital on the financial performance of the firms which is believed to be as a result of high agency cost. Also, more long-term debt should be used for financing building material firms' investments. By so doing, the firms can spread the interest on debt liabilities over a period that will not be of burden to the firms in turn bring about a positive significant effect on the firms' financial performance.

Keywords: Capital structure; Data; Financial performance and Nigeria (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.afarng.org/wp-content/uploads/2022/03/ ... ssue-1-June-2021.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:amjoms:0030

Access Statistics for this article

Multidisciplinary Journal of Management Sciences is currently edited by Muhammad Akaro Mainoma, Godwin Emmanuel Oyedokun and Suleiman A. S. Aruwa

More articles in Multidisciplinary Journal of Management Sciences from Association of Forensic Accounting Researchers (AFAR) Contact information at EDIRC.
Bibliographic data for series maintained by Daniel Akanbi ().