The debt-to-equity ratio of a firm determines how cash flows will be shared between debt holders and equity holders. In reality, capital structure of a firm is difficult to determine. Financial managers are difficult to exactly determine the optimal structure. The main objective of this study is to determine the effect of capital structure on the performance of quoted Manufacturing firms in Nigeria. The study used multiple regression analysis of the ordinary least square analysis in testing the hypothesis considered in this study, and the statistical analysis was done using SPSS. The result reveal that, Leverage has significant effect on the performance of quoted Manufacturing firms in Nigeria showing that firm that has high profitability and good performance have less debt. It is therefore recommended that, management of quoted manufacturing firms should work very hard to improve the leverage of their quoted Manufacturing firms in order to increase the returns on equity, return on assets and investment. They can do that by ensuring that capital structure is optimal.
TABLE OF CONTENTS
Title Pagei
Certificationii
Dedication iii
Acknowledgement iv
Abstract v
CHAPTER ONE
INTRODUCTION
1.1Background of the study 1
1.2Statement of the problem 6
1.3Objectives of the study 7
1.4Justification of the study 7
1.5Research questions 9
1.6Statement of hypothesis10
1.7Scope of the study10
1.8Definition of terms11
CHAPTER TWO
LITERATURE REVIEW
2.0Introduction13
2.1Conceptual review14
2.1.1.1Concept of capital structure14
2.1.1.2Importance of capital structure16
2.1.1.3Factors influencing the choice of capital structure17
2.1.2Capital structure and cost of capital19
2.1.3Concept of firm performance20
2.1.3.1Measurement of firm performance21
2.1.4Capital structure and financial gearing24
2.1.5Types of leverage26
2.1.6Capital structure and firm performance29
2.2Theoretical review of the study33
2.2.1Exogenous growth theory33
2.2.2Capital structure theory34
2.2.3Trade-off theory of capital structure34
2.2.4Pecking order Theory35
2.2.5Agency cost theory35
2.3Empirical review of the study36
CHAPTER THREE
RESEARCH METHODOLOGY
3.1Research design 43
3.2Population of the study 43
3.3Sample technique and Sample Size43
3.4Sources of data 44
3.5Model Specification44
3.6Measurement of Variables 45
3.7Method of Analysis45
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.1Introduction46
4.2Data presentation47
4.2.1Determinants of effect of leverage on the performance of Nigeria quoted manufacturing firms51
4.3Effect of leverage on return on equity of Nigeria quoted manufacturing firms 52
4.4Discussions of findings53
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1Summary 56
5.2Conclusion 57
5.3Recommendations 57
BIBLIOGRAPHY59
APPENDIX66
