CAPITAL STRUCTURE AND AGENCY COST DETERMINANTS ON VALUE OF NON-FINANCIAL FIRMS NIGERIA

Abstract

This study examined the impact of capital structure, agency cost on firms’ value of non-financial listed firms in Nigeria over the period of 2011 to 2020. Panel regression techniques was adopted. The study revealed that debt ratio (long term debt to assets) has a positive (negative) and significant effect on the value of firm. The study also revealed that there is a positive and significant effect of asset tangibility and operating expenses to sales on the value of the non-Financial firms in Nigeria. Based on the interactive effect, it was revealed that the negative effect of long term debt ratio on Tobin’s Q ratio (TQ) is increased for firm with high agency problem. Also, the study discovered that positive effect of debt to assets on Tobin’s Q ratio (TQ) is reduced for the firm with high agency problem. Thus, this increase will only come when there optimality.  The study therefore recommends that since capital structure matters, non-financial firms should use debt optimally so as to increase market value.