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Macroeconomic and institutional determinants of firms'choices of capital structure in Nigeria: a system-GMM approach

Author

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  • Olumuyiwa Tolulope Apanisile
  • John Ayobamibo Olayiwola

Abstract

The study investigates whether external environment in which firms operate plays any role in the choice of corporate capital structure decision in Nigeria. A panel data of 66 listed companies, comprising firms' leverage, macroeconomic variables and institutional quality, are used. Data are collected from World Development Indicator, OPEC annual oil price statistics, annual reports and accounts of selected listed companies, fact books published by Nigerian stock exchange and International Country Risk Guide between 1999 and 2015. The study employs pooled OLS, random effect and system-GMM for the analysis. Results show that external environment plays important role in the choice of firm's capital structure as macroeconomic variables and institutional quality variable have significant results. Macroeconomic variables such as inflation, oil price, GDP and lagged value of the dependent variable, have positive and significant results on leverage. Other variables, such as exchange rate, corruption and investment have negative effects on leverage.

Suggested Citation

  • Olumuyiwa Tolulope Apanisile & John Ayobamibo Olayiwola, 2019. "Macroeconomic and institutional determinants of firms'choices of capital structure in Nigeria: a system-GMM approach," International Journal of Business and Emerging Markets, Inderscience Enterprises Ltd, vol. 11(1), pages 89-107.
    • Handle: RePEc:ids:ijbema:v:11:y:2019:i:1:p:89-107
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    Citations

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    Cited by:

    1. Emmanuel Kukah Damina & Taiwo Muritala & Abbas Umar Ibrahim, 2022. "Effect of Speed of Adjustments on Capital Structure Decision: A Conceptual Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 12(6), pages 15-21, November.
    2. Osinubi, Tolulope Temilola & Apanisile, Olumuyiwa Tolulope, 2021. "Effect of Agricultural Investment On Food Security in Sub-Saharan Africa: What Role Does Institution Play?," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 9(2), April.

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