Capital Structure Decisionson A Firm’s Value; A Study of Manufacturing Companies In Nigeria
Journal Title: IOSR Journal of Economics and Finance (IOSR-JEF) - Year 2018, Vol 9, Issue 3
Abstract
The capital structure decision of an entity enables it to have a capital mix which enhances maximization of the organisation’s value. The study aims at exploring the capital structure decision of manufacturing companies in Nigeria so as to establish the effect of capital structure decisionson maximum organisational value enhanement. The variables used as a proxy for capital structure include debt to; equaity ratio, total asset ratio, total asset ratio and total asset ratio while the variable used forfirms’ value is return on assets (ROA). The sample size used in this study includes 10 manufacturing listed firms in Nigeria and the analysis techniques used in the study is random sampling method. The data required is obtained from the financial statements of the listed manufacturing companies for the period of 2013-2017. The method of analysis in this study was multiple regression analysis model was used to estimate the relationship between capital structure and firm’s value. The result revealed that companies with debt and equity mix has higher value than companies with only equity as it significantly affect return on assets which support the traditional view of capital structure. Therefore, the study suggests that companies should ensure that there is a judicious mix of debt and equity in their capital structure which will reduce the weighted cost of capital (WACC) and on the long run enhance the organisations’ value.
Authors and Affiliations
Joshua A. A, Gbenedio A. E, Falola I. Y,, Oluwagbemi S. T, Lofinmakin B. A, Tams-Alasia O.
Keywords
Related Articles
- EP ID EP414659
- DOI 10.9790/5933-0903016872.
- Views 200
- Downloads 0
Factors affecting financial performance of water service providers. A case of public water companies in kenya.
Financial performance of public water companies is increasingly gaining attention in the water sector. Theoretically, there is consensus that viability of an organization is related to its financial performance. The aim...
Oil and Gas Management: Issues and Prospects
Oil and gas management has recently become complex due to the demands from stakeholders especially during different price regime. The study examined the tensions created by the international oil companies and the nationa...
SHG as an Effective Approach to Women Empowerment
All round development of a nation would be possible only when women are considered as equal partners in progress with men, as women are the integral part of every economy. Today women empowerment is one of the most vibra...
Migrants’ Remittances and Poverty in ECOWAS
The rise of emigrants in West Africa is associated with the quest to migrate out of poverty. Migrants’ remittances often help in stimulating demands for goods and services and providing support for families left behind....
Perceptions of Employability among Employers in Bangladesh
Employability is seen as the ability of the individual that deemed essential for the future functioning of the organization of the employers. It is the main building block of the production process. General trends showed...