Influence of Profitability and Firm Growth on Capital Structure among Listed Manufacturing Companies in Nigeria

Bamidele Mahew Mayor (), Omole Ilesanmi Isaac () and Adewumi Ayodeji Davidson ()
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Bamidele Mahew Mayor: Department of Management and Accounting, Postal: Lead City, University Ibadan, Oyo, State, Nigeria., https://www.afarng.org/mjms/
Omole Ilesanmi Isaac: Department of Management and Accounting, Postal: Lead City, University Ibadan, Oyo, State, Nigeria., https://www.afarng.org/mjms/
Adewumi Ayodeji Davidson: Department of Auditing and Taxation, Postal: Durban University of Technology, South, Africa., https://www.afarng.org/mjms/

Multidisciplinary Journal of Management Sciences, 2022, vol. 4, issue 3, 1-17

Abstract: This study examined the influence of profitability and firm growth on capital structure of listed manufacturing companies in Nigeria from 2010 to2019.To make the study robust, control variables of firm age and macroeconomic factors were added. Longitudinal panel research design was used and sample size of 34 manufacturing firms determined by judgmental sampling technique. Secondary data covered all variables were sourced from audited annual published account from sampled listed manufacturing companies. Data were analysed through descriptive, correlation and panel Fixed Generalized Least regression technique and diagnostics tests such as heteroskedelaticity and multicollinearity were conducted. . The overall results shows significant influence of profitability and firm growth, firm age, inflation and GDP on leverage structure as indicated (F-stat. =19.4770 with corresponding P-value =0.00000).This study concluded that the, performance variables of profitability and firm growth, firm age as well as macroeconomic factors of inflation and GDPg are considered as whole determinants of optimal capital structure decision among Nigerian manufacturing firms. This study therefore, recommended among others that the management of Nigerian listed manufacturing firms should take edge of their firms' profitability and growth opportunity to increase return on investment and lower of debt which will directly give expanded chances for business development which is supported by pecking order and tradeoff theories.

Keywords: Capital structure; firm growth; profitability; Firm age (search for similar items in EconPapers)
Date: 2022
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