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IMPACT OF FIRM ATTRIBUTES IN THE DETERMINATION OF CAPITAL STRUCTURE OF LISTED FOOD AND BEVEARGES FIRMS IN NIGERIA

Mohammed Musa Bashir
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Mohammed Musa Bashir: Ahmadu Bello University, Postal: Bursary Department, Zaria, Nigeria

International Journal of Accounting and Finance (IJAF), 2019, vol. 08, issue 2, 64-74

Abstract: The study examines the impact of firm attributes in determination capital structure of listed food and beverages companies in Nigeria from the perspective of pecking order and trade off theories. Firm characteristics are proxied bygrowth opportunity, firm size, profitability, assets tangibilityand non-debt taxshields, while the dependentvariable (capitalstructure) is representedbyleverage. The studyuses secondary data collected by means ofdocumentation for the period of ten years ranging from 2008- 2017. The research design employed was correlational in nature. The hypotheses formulated for the study was tested by mean of robust multiple regression equation. Post estimation tests such as multicollinearityandheteroscedasticitytests were carriedoutto validate the results. The findings ofthe studyon one handshowthatnon-debttax shields has no significanteffecton the companies'leverage, but in the case of growth opportunity, firm size and assets tangibility, positive statistical significant relationships were established. On the other hand, profitability has been established to show significant negative relationship with leverage. The study concludes that firm characteristics have significant effect on financing mix of the companies under investigation. Therefore, the study recommends that companies should be wary of increasing debt finance in their financing mix by only taken into cognizance of these firm specific attributes. Finance managers should carefully consider the costs of taken on more debts and painstakingly strike a balance between the costs of debt and their eventual benefits thereof. Finally, regulatory authorities should come up with flexible rules that will enable companies have easy access to long term debt financing option

Keywords: Firm characteristics; Growth opportunity; Firm size; Tangibilty; Profitability and non-debt tax shield (search for similar items in EconPapers)
Date: 2019
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