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Effect of Leverage on the Profitability of Nigerian Consumer Goods Manufacturing Firms

Author

Listed:
  • Abdul-Azeez Adeniyi Alao

    (Department of Accounting, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Nigeria)

  • Wasiu Abiodun Sanyaolu

    (Department of Accounting, Crescent University, Abeokuta, Ogun State, Nigeria)

Abstract

This study examined the effect of leverage on the profitability of Nigerian manufacturing firms based on the data of seventeen (17) Nigerian consumer goods firms listed on the Nigerian Stock Exchange for the period of 2012 to 2017. The study adopted the dynamic panel model. The main finding of the study revealed that leverage has a significant positive effect on profitability with p-value of 0.0000. The study therefore recommended that companies in the Nigerian consumer goods industry should take advantage of debts’ tax shield from the interest in their financial structure in order to improve their profitability level.

Suggested Citation

  • Abdul-Azeez Adeniyi Alao & Wasiu Abiodun Sanyaolu, 2020. "Effect of Leverage on the Profitability of Nigerian Consumer Goods Manufacturing Firms," Business & Management Compass, University of Economics Varna, issue 1, pages 5-25.
    • Handle: RePEc:vrn:journl:y:2020:i:1:p:5-25
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    References listed on IDEAS

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    More about this item

    Keywords

    Degree of operating leverage; Degree of financial leverage; Degree of combined leverage; Earnings per Share;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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