The Empirical Trends In The Capital Structure Of Quoted Companies On Nigeria Stock Exchange (A Case Study Of Some Selected Quoted Companies)

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ABSTRACT

The issue of capital structure is being generating controversy among financial manager throughout the world. A lot of theories and suggestions have advanced as to the best way to handle issue, but there seems to be no concessions on the issue. This study and attempt to provide empirical evidence on the trend of capital structure of Nigeria quoted companies. The sole objectives is to examine the extent of the use of debt vis-à-vis equity fund for selected quoted companies likewise, we will look at the relation between a company’s capital structure and its profitability, liquidity as well as investors’ expectations. The five companies selected for examination are all quoted on the Nigeria stock exchange. The data used were collected from various annual financial reports of such companies. The study covers the period 2006-2010 and a method of financial ratio was employed for the analysis. The analysis of the result obtained confirmed that Nigeria quoted companies employ lower level of debt vis-à-vis equity funds. We were also able to conclude that capital structure has a negative influence on company’s profitability and liquidity and has no significant influence on investor’s expectations.

TABLE OF CONTENT

Title Pagei

Certificationii

Dedicationiii

Acknowledgementiv

Abstractv

Table of contentvi

CHAPTER ONE: INTRODUCTION

1.1Background to the Study1

1.2Objective of the Study2

1.3Research Questions2

1.4Benefits of the study3

1.5Scope and Limitations of the Study3

1.6Study Outline4

CHAPTER TWO: LITERATURE REVIEW

2.1Overview of Nigerian Economic and Financial

Environment 6

2.2Sources of Business Capital 11

2.3Benefits of Investing in Bonds 26

2.4Theory of Capital Structure 26

2.5Consideration in the Determination of

Capital Structure 36

2.6Empirical Trends in the Structure of Quoted

Companies of Nigeria Stock Exchange 42

2.7Capital Structure: Comparative analysis 44

CHAPTER THREE: RESEARCH METHODOLOGY

3.1Introduction 52

3.2Restatement of Research Question 52

3.3Sources and nature of data 52

3.4Sample Size 53

3.5Data Analytical Procedure 53

3.6Limitations to the Study 54

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1Introduction 55

4.2Presentation of Data 55

4.3Interpretation of Analysis 64

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1Summary and Findings 68

5.2Conclusion 69

5.3Recommendations 71

Bibliography 74

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The Empirical Trends In The Capital Structure Of Quoted Companies On Nigeria Stock Exchange (A Case Study Of Some Selected Quoted Companies)

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