Publisher: University of Calabar

The Impact of Capital Structure On Financial Performance of Listed Firms In The Nigerian Oil and Gas Industry

Mahmud Bashiru, Musa Bukar
KEYWORDS: Capital Structure, Financial Performance, Nigerian Oil and Gas Industry, NSE.

ABSTRACT:

This study examines the impact of capital structure on financial performance of listed firms in Nigerian Oil and Gas industry. The study adopted an ex-post facto research design and utilized panel data collected from annual reports and accounts of the sampled firms for the periods of 2005 to 2014. The Data was first analysed using descriptive statistics to provide summary statistics of the variables. Subsequently a panel data regression technique was used to assess the extent of the effect of the independent variables on the dependent variables. It was found that capital structure proxied by STD, LTD and TD has negative and significant relationship with financial performance (ROA and EPS) of listed petroleum marketing companies in Nigeria. Furthermore, the result also shows that firm size and tangibility have positive and significant relationship with ROA and EPS. Thus, the study concludes that statistically, capital structure is a major determinant of firm financial performance. Therefore it is recommends that managers of oil and gas companies should exercise caution while choosing the amount of debt to use in their capital structure as it affects their performance negatively.

This study examines the impact of capital structure on financial performance of listed firms in Nigerian
Oil and Gas industry. The study adopted an ex-post facto research design and utilized panel data
collected from annual reports and accounts of the sampled firms for the periods of 2005 to 2014. The
Data was first analysed using descriptive statistics to provide summary statistics of the variables.
Subsequently a panel data regression technique was used to assess the extent of the effect of the
independent variables on the dependent variables. It was found that capital structure proxied by STD,
LTD and TD has negative and significant relationship with financial performance (ROA and EPS) of
listed petroleum marketing companies in Nigeria. Furthermore, the result also shows that firm size and
tangibility have positive and significant relationship with ROA and EPS. Thus, the study concludes that
statistically, capital structure is a major determinant of firm financial performance. Therefore it is
recommends that managers of oil and gas companies should exercise caution while choosing the amount
of debt to use in their capital structure as it affects their performance negatively.


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