INFLUENCE OF FIRM SPECIFIC AND CORPORATE GOVERNANCE FACTORS ON CAPITAL STRUCTURE OF PUBLICLY LISTED NON-FINANCIAL FIRMS IN NIGERIA

Abstract

The primary aim of this research is to investigate the impact of firm-specific and corporate governance variables on the capital structure of non-financial firms that are publicly listed in Nigeria. The study's population consists of 123 non-financial firms listed on the Nigerian Exchange Group between 2006 and 2020. A sample of 58 firms was selected using an inclusion and exclusion approach. The data was analysed using the generalized method of moments technique. The results indicate that past values of total debt to assets exhibit a noteworthy and favourable impact on present values of total debt to assets. Conversely, the current ratio, return on assets, non-current assets, board ownership, and board independence display an unfavourable and noteworthy influence on total debt to assets. Return on equity and debt-tax-shield, on the other hand, demonstrate an unfavourable and insignificant impact on total debt to assets. Finally, tangibility and block-ownership manifest a favourable and noteworthy influence on total debt to assets. Conversely, the variables pertaining to firm-specific and corporate governance exhibit noteworthy impact on the ratio of long-term debt to equity. The study recommends that firms should consider past level of debts when setting current debt levels.