CAPITAL STRUCTURE AND FIRM VALUE OF LISTED FIRMS IN NIGERIA: CONSUMER GOODS FIRMS EXPERIENCE
Keywords:
Capital structure, Firm value, Debt-to-equity ratio, Debt ratioAbstract
This study investigated the effect of capital structure on the firm value of listed consumer goods firms in the Nigerian Exchange Group. Amid Nigeria’s challenging economic environment, marked by high interest rates, unstable regulatory frameworks, and limited access to long-term financing, firms often struggle to strike a balance between leveraging debt for growth and mitigating the risks of financial distress. The study specifically seeks to ascertain the effect of debt-to-equity ratio and debt ratio on firm value. Ex-post facto design was used, using panel data derived from annual financial reports of listed consumer goods firms, from 2014-2024. This study uses purposive sampling technique to select thirty-two (32) manufacturing firms sample size. Ordinary Least Square regression technique was used to evaluate the effect of capital structure on firms value through E-view version 10.0 software for data analysis. The study found that Debt-to-equity ratio has significant effect on firm value while Debt ratio has no significant effect on firm value of listed Consumer goods firms in Nigeria. Tis study recommends among others that management of listed Consumer goods firms in Nigeria should aim to reduce their debt-to-equity ratio by seeking alternative financing options such as equity financing or retained earnings. This can help decrease financial risk and improve cash flow stability, ultimately enhancing firm value.
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