DETERMINANTS OF FINANCIAL STRUCTURE EVIDENCE FROM NIGERIAN QUOTED FIRMS
The study sought to examine the determinants of financial structure of Nigeria quoted firms during the period spanning 1999 – 2014. The 15- year period accommodated several time periods and data points. The study adopted ex-post facto research design. The research work also adopted two theoretical frameworks: Pecking Order and Static Trade – off theories captured in a panel regression model. A sample of 24 firms was selected based on data quality and availability to address the requirements of the variables in the model. Five hypotheses were formulated and tested using Pooled Ordinary Least Squares (OLS) multiple regression. Results show that profitability (PRT) had a positive and significant impact on financial structure; tangible fixed asset (TAN) has a positive and significant impact on financial structure of quoted firms; growth opportunities (GRW) had a positive and significant impact on financial structure of Nigerian quoted firms. Results of panel regression also indicate that operating risk (volatility), (OPR) had a positive and statistically significant impact on financial structure of listed firms in Nigeria. Finally, firm size (FST) which is the natural logarithm of total assets had a positive and significant impact on financial structure. Firm size was used to control possible non-linearity and prevent problem of heteroskedasticity. These findings are corroborative of theoretical and empirical predictions. For instance, employing a high proportion of a long term debt in the financial structure results in low profitability because short-term debts are less expensive, but accessible to many firms. On the basis of the entire findings, useful recommendations for optimal financial mix by managers as well as measures to enhance the management of the Nigerian Stock Exchange were made. For instance, reducing floatation costs insider abuses will enable firms to access funds easily and increase investors confidence respectively.
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