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Re-examining the determinants of capital structure in Nigeria

Author

Listed:
  • Segun Thompson Bolarinwa
  • Abiodun Adewale Adegboye

Abstract

Purpose - The paper investigates the determinants of capital structure and the speed of adjustment of capital structure decisions of Nigerian firms. Design/methodology/approach - The paper adopts three methods: difference GMM, system GMM and stochastic frontier analysis (SFA). Findings - The empirical results show that firms' efficiency affects the capital structure decisions of Nigerian firms. At the same time, short-term debt has a higher speed of adjustment in the context of Nigerian firms. The roles of other control variables are established in the paper. Social implications - Nigerian firms should adopt short-term debt in order to achieve their targeted debt levels. Managers of Nigerian firms are also advised to be more efficient in order to attract higher performance. Originality/value - The paper is the first literature to measure the efficiency of firms using SFA method. Extant studies in the literature have neglected the determinant while four papers that adopt the determinant data envelope analysis (DEA) method. This is also the first study to document the speed of adjustment in capital structure decisions in the context of Nigerian firms.

Suggested Citation

  • Segun Thompson Bolarinwa & Abiodun Adewale Adegboye, 2020. "Re-examining the determinants of capital structure in Nigeria," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 37(1), pages 26-60, July.
    • Handle: RePEc:eme:jeaspp:jeas-06-2019-0057
    DOI: 10.1108/JEAS-06-2019-0057
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    Citations

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    Cited by:

    1. Segun Thompson Bolarinwa & Richard Olaolu Olayeni & Xuan Vinh Vo, 2021. "Is there a nonlinear relationship between nonperforming loans and bank profitability? Evidence from dynamic panel threshold," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(3), pages 649-661, April.
    2. Segun Thompson Bolarinwa & Olawale Akinyele & Xuan Vinh Vo, 2021. "Determinants of nonperforming loans after recapitalization in the Nigerian banking industry: Does efficiency matter?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(6), pages 1509-1524, September.
    3. Tekalign Negash Kebede, 2024. "Firm-specific and country-level determinants of commercial banks capital structures: evidence from Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 13(1), pages 1-25, December.
    4. Ayobami Ojeyinka, Titus & Enisan Akinlo, Anthony, 2021. "Does Bank Size Affect Efficiency? Evidence From Commercial Banks In Nigeria," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 8(1), pages 79-100, June.

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