Capital Structure and FirmPerformance among the listed Agro-Allied Firms in Nigeria

Abstract

The study empirically investigated the effect of capital structure on firm performance among agro-allied firms listed on the Nigerian Stock Exchange from 2003 to 2017. Pooled OLS, random effect and fixed effect regressions were used to analyse the data. Performance was measured by return on investment, return on assets and earnings per share while capital structure was captured by leverage and equity finance. Equity finance was found to have a significant effect on returns on investment and assets while leverage impacted earnings per share. Also, firms’ growth and age were positively related to performance while size had an inverse relationship. Therefore, firms should adopt an efficient equity-debt ratio that significantly improves performance over a specific production period.