SOURCE:

Faculty: Management Sciences
Department: Banking And Finance

CONTRIBUTORS:

Major H. Iheanyi
Adigwe P. K.
Ibenta Steve N.

ABSTRACT:

This study examined the relationship between Financial Structure and Financial Performance of Listed Consumer Goods Manufacturing Firms in Nigeria: 2001-2016. Specifically the study examined how financial structure of firms related with their financial performance. Twenty-one firms listed in the Stock Market during this period were identified for the study. The study was anchored on Pecking Order theory of financial structure. Ex-post facto research design was adopted and panel data obtained from the Nigerian Stock Exchange Fact-Book was used for the study. Ordinary Least Square (OLS) technique was adopted to estimate relationship between financial structure and financial performance of the firms using return on assets (ROA), return on equity (ROE) and earnings per share (EPS) as the financial indicators. Short-run regression was used in testing the hypotheses formulated for the study. The tests revealed that there exist significant relationship between financial structure and return on assets (ROA), return on equity (ROE) and earnings per share (EPS) of the firms. The study concludes that financial structure decision is relevant as it has significant influence on the financial performance of the firm. Recommendations include that attention should be paid to proper combination of equity and debt as a means of financing the firm’s operations. Government should also assist in creating enabling environment for manufacturing activities to thrive. These should include assisting in reduction of cost of funds and to facilitate payment for imported manufacturing materials.