2022 Archive
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Title: EFFECT OF CAPITAL STRUCTURE ON PROFITABILITY OF LISTED CONSTRUCTION FIRMS IN NIGERIA.pdf Author: UDOCHUKWU G.O, JOHN C.O, EJEM CHUKWU AGWU & PREYE OMBU Abstract: Abstract This study lent its voice with regards to the unending controversy on the relevance of Capital Structure and firms value. The data of the study represented profitability variable (Earnings per Share) and Capital structure variables (Debt Ratio, Equity Ratio, and Leverage Ratio) of three construction firms listed on the Nigerian Exchange Group Plc (NGX) for period of ten years (2011 to 2020). This study employed all the variants of panel data analysis techniques, where the result of the fixed effect found that all the variables of capital structure impact significantly on the profitability of the three selected construction firms within the scope of this study. The results corroborate the propositions of net income theory which support that firms should borrow as much as possible to minimize the cost of capital and maximize the value of the firm, hence affirms the relevance of capital structure in determining the firm’s value. The result of the Likelihood test favoured the fixed effect that unobserved variables are important explanatory variable of firms’ profitability. Considering the finding. The researchers recommend that firms should go for issuance of debentures and other loans to enhance flexibility of financial plans. Keywords: Earning Per Share, Debt/Equity ratio, Net Income theory, Panel Data View |