Capital structure and firm performance: Evidence from Nigeria
European Journal of Economics, Finance and Administrative Sciences
Department of Management Science, Ladoke Akintola University of Technology, Ogbomoso, Nigeria; Department of Accounting, Olabisi Onabanjo University, Ago-Iwoye, Nigeria
This paper examines the impact of capital structure on firm's financial performance using sample of thirty non- financial firms listed on the Nigerian Stock Exchange during the seven- year period, 2001- 2007. Panel data for the selected firms are generated and analyzed using Ordinary Least Squares (OLS) as a method of estimation. The result shows that a firm's capital structure surrogated by Debt Ratio, DR has a significantly negative impact on the firm's financial measures (Return on Asset, ROA and Return on Equity, ROE). The study by these findings, indicate consistency with prior empirical studies and provide evidence in support of Agency cost theory. © EuroJournals, Inc. 2010.