Effect Of Financial Leverage On Financial Performance Of Listed Companies In Nigeria:- Ude Queendaline

Abstract

This study was investigated the effect of financial leverage on performance oflisted companies ’” ° (DER), debt ratio (DR) and interest cover (I ) were p proxies or financial leverage while return on assets, return on equity and return on inves men were a opte as proxies of performance. Data for the study was sourced from reP° s ° se ecte companies. To analyze the data collected, the study used the Pooled Ordinary Least Squares (OLS) multiple regression technique. Findings revealed that debt-equity ra 10 a negative and significant effect on return on assets and return on investment but a positive and insignificant effect on return on equity of listed companies in Nigeria. The study a so revea e t rat ebt ratio had positive and insignificant effect on return on assets and return on investment but it exhibited a negative and insignificant effect on return on equity of listed companies in Nigeria. Finally, the study showed that interest cover had positive and significant effect on return on assets, return on equity and return on investment of listed companies in Nigeria. The study recommended, among others, that financial managers should be mindful of excessive debt when raising capital for their business as a high debt-equity ratio undermines the performance of listed companies in Nigeria. Rather they, should adopt equity financing in order to increase the performance (in terms of return on assets and return on investment) oftheir businesses.