ABSTRACT
The study assessed
the effect of capital structure on financial performance of building material
firms in Nigeria. An ex-post facto research design was employed and data gotten from 8 out
of 9 listed building material firms on the Nigerian stock exchange using a
judgmental sampling technique. The specific objectives to this study is to
examine the effect of capital structure (EQT, LTD & STD) on return on assets
of building material firms in Nigeria. Secondly to determine the effect of
capital structure (EQT, LTD & STD) on return on equity of building material
firms in Nigeria. Again is to examine the effect of capital structure (EQT, LTD
& STD) on earnings per share of listed building material firms in Nigeria. The
study employed the use of panel regression (OLS) for analysis of data. Findings
revealed that equity capital structure has a significant effect on the
return on assets, return on equity and earnings per share of listed building
material firms in Nigeria. Also, long term debt capital structure has no
significant effect on the return on assets, return on equity and earnings per
share of listed building material firms in Nigeria. Finally, short term debt
capital structure has no significant effect on return on assets, return on
equity and earnings per share of listed building material firms in Nigeria. It
was recommended that listed building material firms should consider the need to
ensure more equity capital combination on their financing decision. This should
be done with due consideration of the cost of capital so as to reduce the
negative effect of equity capital on the financial performance of firms which is believed to be as a result of
high agency cost. More long term debt should be used for financing building
material firms’ investments. By so doing, the firms can spread the interest on
debt liabilities over a period that will not be of burden to the firms in turn
bring about a positive significant effect on the firms’ financial performance.
Furthermore, firms should go for short term debts with low repayment interest.
This will enable them have enough reserves for reinvestment which will burst
the firms’ financial performance.
-- (2023). Effect Of Capital Structure On Financial Performance Of Building Materials Firms In Nigeria. Repository.mouau.edu.ng: Retrieved Sep 08, 2024, from https://repository.mouau.edu.ng/work/view/effect-of-capital-structure-on-financial-performance-of-building-materials-firms-in-nigeria-7-2
--. "Effect Of Capital Structure On Financial Performance Of Building Materials Firms In Nigeria" Repository.mouau.edu.ng. Repository.mouau.edu.ng, 20 Jun. 2023, https://repository.mouau.edu.ng/work/view/effect-of-capital-structure-on-financial-performance-of-building-materials-firms-in-nigeria-7-2. Accessed 08 Sep. 2024.
--. "Effect Of Capital Structure On Financial Performance Of Building Materials Firms In Nigeria". Repository.mouau.edu.ng, Repository.mouau.edu.ng, 20 Jun. 2023. Web. 08 Sep. 2024. < https://repository.mouau.edu.ng/work/view/effect-of-capital-structure-on-financial-performance-of-building-materials-firms-in-nigeria-7-2 >.
--. "Effect Of Capital Structure On Financial Performance Of Building Materials Firms In Nigeria" Repository.mouau.edu.ng (2023). Accessed 08 Sep. 2024. https://repository.mouau.edu.ng/work/view/effect-of-capital-structure-on-financial-performance-of-building-materials-firms-in-nigeria-7-2