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

Author

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  • Godsday Okoro Edesiri

    (Nnamdi Azikiwe University)

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

Suggested Citation

  • Godsday Okoro Edesiri, 2014. "Financial Leverage Behaviour and Firm Performance: Evidence from Publicly Quoted Companies in Nigeria," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 10(4), pages 99-106, August.
    • Handle: RePEc:dug:actaec:y:2014:i:4:p:99-106
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    File URL: http://journals.univ-danubius.ro/index.php/oeconomica/article/view/2416/2182
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    References listed on IDEAS

    as
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    3. Fosu, Samuel, 2013. "Capital structure, product market competition and firm performance: Evidence from South Africa," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(2), pages 140-151.
    4. Samuel Fosu, 2013. "Capital Structure, Product Market Competition and Firm Performance: Evidence from South Africa," Discussion Papers in Economics 13/11, Division of Economics, School of Business, University of Leicester.
    5. González, Víctor M., 2013. "Leverage and corporate performance: International evidence," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 169-184.
    Full references (including those not matched with items on IDEAS)

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