Determinants of Capital Structure: Empirical Evidence from Quoted Electrical and Electronic Technology Firms in Nigeria (2010-2015)

Chapter 3 in: Managing Diversification for Sustainable Development in Sub-Saharan Africa - Proceedings of Faculty of Management Sciences' 2016 International Conference, 8th-10th November, ISBN: 978-978-8517-67-2

14 Pages Posted: 12 Jan 2017

See all articles by Nestor Amahalu

Nestor Amahalu

Nnamdi Azikiwe University

Mary-Fidelis Chidoziem Abiahu

Nnamdi Azikiwe University - Department of Accountancy

Okika Christian

Nnamdi Azikiwe University

Obi Chinyere

University of Nigeria Enugu Campus

Date Written: November 8-10, 2016

Abstract

The objective of this is to determine the determinants of Capital Structure with a focus on quoted electrical and electronic technology firms in Nigeria. This study made use of secondary data obtained fact books, annual reports and account of the firms under study. The relevant data were subjected to STATA 13 statistical analysis using Pearson coefficient of correlation and multiple regression. The result of this study revealed that there is a positive and significant relationship between profitability, firm size, non-debt tax shield and Capital Structure (proxy by total debt, long term debt and short term debt). It was also empirically verified that profitability, firm size and non-debt tax shield have a statistically significant effect on Capital Structure of electrical and electronic technology firms quoted on the floor of Nigerian Stock Exchange at 5% level of significance. The researchers recommend that managers of firms should be cautious when seeking loan advances from the money market. This is more important when considering the appropriate capital mix that optimizes firm value, because a wrong mix may significantly raise their level of operational and financial risks.

Keywords: Capital structure, Profitability, Leverage

JEL Classification: M41

Suggested Citation

Amahalu, Nestor and Abiahu, Mary-Fidelis Chidoziem and Okika, Elochukwu and Obi, Juliet, Determinants of Capital Structure: Empirical Evidence from Quoted Electrical and Electronic Technology Firms in Nigeria (2010-2015) (November 8-10, 2016). Chapter 3 in: Managing Diversification for Sustainable Development in Sub-Saharan Africa - Proceedings of Faculty of Management Sciences' 2016 International Conference, 8th-10th November, ISBN: 978-978-8517-67-2, Available at SSRN: https://ssrn.com/abstract=2895226

Nestor Amahalu

Nnamdi Azikiwe University ( email )

P.M.B 5025, Awka
PMB 5025
Awka, DE Anambra State P.M.B. 5025
Nigeria

Mary-Fidelis Chidoziem Abiahu (Contact Author)

Nnamdi Azikiwe University - Department of Accountancy ( email )

Awka, Anambra 23400
Nigeria

Elochukwu Okika

Nnamdi Azikiwe University ( email )

Department of Accountancy
PMB 5025
Awka, DE Anambra State +234
Nigeria

Juliet Obi

University of Nigeria Enugu Campus ( email )

Department of Accountancy
Box 15540, Enugu
Enugu, NC Enugu 234
Nigeria

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