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Capital Structure and Profitability of Selected Listed Companies in Nigeria

Author

Listed:
  • Adekola Adeola Adebayo

    (Department of Accounting, The, Polytechnic, Ibadan, Nigeria)

  • Folajinmi Festus Adegbie

    (Department of Accounting, Babcock University, Nigeria)

  • Rafiu Oyesola Salawu

    (Department of Management and Accounting, Obafemi Awolowo University, Nigeria)

Abstract

Capital structure of firms is a topical issue that propels the sustainability of concerns. The study investigated capital structure and performance of selected listed companies in Nigeria. This study adopted ex-post facto research design. Secondary data were sourced from the audited annual reports of the sampled firms. The population comprised 170 listed companies on Nigerian Stock Exchange (NSE) as at December 2019. The sample consisted of 60 selected companies, using purposive sampling technique to cover various sectors. Pre-estimation tests were conducted, using correlation matrix and independent t-test. The post-estimation tests included linearity, heteroskedasticity, Breusch-Godfrey serial correlation Langragian Multiplier and normality test. Data were analyzed using descriptive and inferential statistics. The result shows R2 = 0.199, 0.527 and Adj. R2 = 0.752. The study revealed that capital structure had significant effect on performance of selected companies in Nigeria. Debt ownership had positive and significant effect on return on capital employed. Equity ownership had positive significant effect on the dividend growth. The study concluded that capital structure affected performance of selected listed companies in Nigeria and therefore recommended that government should formulate a policy that will encourage a balanced capital structure of listed companies so as to enhance performance that creates value for stakeholders and ensure the going concern of the firm

Suggested Citation

  • Adekola Adeola Adebayo & Folajinmi Festus Adegbie & Rafiu Oyesola Salawu, 2021. "Capital Structure and Profitability of Selected Listed Companies in Nigeria," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 8(1), pages 05-22, January.
    • Handle: RePEc:bjc:journl:v:8:y:2021:i:1:p:05-22
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    References listed on IDEAS

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