Capital Structure: The Case of Nigerian Non Financial Corporations

ABSTRACT: The aim of this empirical study is to look into the determinants of capital structure of non-financial firms in Nigeria and the impact of the capital structure on the corporate performance of these publicly traded firms. Different theories of capital structure were reviewed with a view to establishing valid propositions concerning the determinants of capital structure of Nigerian non financial corporations. The research is conducted using panel data methodology for a sample of 20 firms listed on Nigerian Stock Exchange during 2006-2010. The results have shown that the major determinants of capital structure based on this study include: profitability, tangibility and liquidity. Age, Size and tangibility play determining roles in accessing long-term debt finance within the Nigerian context. Non-financial firms in Nigeria that are highly profitable would prefer internal funding over debt financing since cost of external financing is expensive. This supports pecking order theory. Keywords: Capital Structure, Corporate Performance, Determinants of Capital Structure. ……………………………………………………………………………………………………………………………………………………………………………………………………………………