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Effect of Capital Structure On The Performance Of Corporate Firms In Nigeria (A Study Of Financial And Manufacturing Sector)

ONYEMA JULIET CHIZOBA MOUAU/ACC/14/24712 | 75 pages (17798 words) | Projects
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Accounting
ABSTRACT
The aim of this study is to examine the effect of capital structure on thefinancialperformance of First City Monument Bank Pfc. However, the major objective of the study is so ascertain the effect of debtfinancing on profit after tax, to ascertain the effect of equity financing on profit after tax and to ascertain the effect of debt/equityratio on the pro.fit after tax. To achieve the above objective of the study, ex-postfactoresearch design was adopted. The researcher adopted secondary data in getting the required information. In testing the hypotheses simpleregression

was used. Thefindings shows that debt financing, equity financing, debt-equity ratios are significant factors  that determine the profit after tax used as a proxy for performance of the bank. So, it was deduced that equityfinancing played a better role than debtfinancing, secondly the contribution of both variables have a significant effectonfinancial performance of thefirm under review. The researcher therefore recommends that in improving bank performance and shares of equityfinancing in the capital structure should be increased andfinally, to avoid conflictof managers with shareholders interest, managersgo for long run value maximization of the firm which satisfies both managers and shareholders interest.

TABLE  OF CONTENTS

Title page

Declaration                                                                                                                                          11

Certification                                                                                                                                        lll

Dedication                                                                                                                                           IV

Acknowledgements                                                                                                                            v 

Table of contents                                                                                                                                Vl 

List of Tables                                                                                                                                     x

Abstract                                                                                                                                               Xl



CHAPTER ONE: INTRODUCTION

1.1       Background  to the Study

1.2          Statement  of Problem                                                                                                           4

1.3          Objectives  of the Study                                                                                                       5

1.4        Research  Questions                                                                                                               5

1.5       Research  Hypotheses                                                                                                            6

1.6          Significant  of the Study                                                                                                       6

1.7        Scope of the Study                                                                                                               7



CHAPTER TWO: LITERATUREREVIEW

2.1           Conceptual  Framework                                                                                                        8

2.1.1         Concept  of Capital  Structure                                                                                               8 

  2.1.2 Financial Performance

2.1.3 Optimal Capital Structure

2.1.3.1 Graphical View of Optimal Structure

2.1.4 Ideal Capital Market

2.1.5 Components of Capital Structure

2.1.5. 1 Equity Financing

2.1.5.2 Debt Financing

2.1.6 Cost of Capital

2.1.6.1 Interest (Cost of Debt)

2.1.6.2 Dividends (Cost.of Equity)

2.1.8 Determinants of Capital Structure

2.1.8.1 Firm Size

2.1.8.2 Industry

2.1.9 Corporate Capital Structure in Developing Countries

2.1.10 Firm Performance and Capital Structure

2.1.10.1 Corporate Performance 27

2.1.10.2  Performance Measures

2.1.11   Profitability Measures

2.1.11.1  Return on Assets (ROA)                                                                                          30

2.1.11.2   Return on Equity (ROE)                                                                                          32

2.1.11.3  Return on Investment (ROI)                                                                                    34

2.12 DebtRatio   ยท

2.2 Theoretical  Review

2.2.1 Irrelevant  and Relevant Theory

2.2.2 Agency  Cost Theory

2.2.3 Pecking  Order Theory

2.3 Empirical Review



CHAPTERTHREE:METHODOLOGY

3 .1 Research  design

3 .2 Data Sources  and Method  of Data Collection

3.2.1 Data Sources

3.2.2 Method  of Data Collection

3.3 Model  Specification

3.4 Data Analysis   Techniques



CHAPTER FOUR:  DATA PRESENTATION AND ANALYSIS

4.1 Data Presentation

4.2 Analysis  of Data

4.3 Test of hypotheses

4.3.1 Hypothesis

4.3.2 Hypothesis

4.3.3 Hypothesis   III

4.4 Discussion of findings



CHAPTER FIVE:  SUMMARY, CONCLUSION  AND RECOMMENDATIONS

5.1         Summary                                                                                                                                57 

5.2        Conclusion                                                                                                                             57

5.3       Recommendation                                                                                                                   58



REFERENCES                                            59


APPENDIX                                                                                                                                         62 

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APA

ONYEMA, M (2021). Effect of Capital Structure On The Performance Of Corporate Firms In Nigeria (A Study Of Financial And Manufacturing Sector). Repository.mouau.edu.ng: Retrieved Nov 24, 2024, from https://repository.mouau.edu.ng/work/view/effect-of-capital-structure-on-the-performance-of-corporate-firms-in-nigeria-a-study-of-financial-and-manufacturing-sector-7-2

MLA 8th

MOUAU/ACC/14/24712, ONYEMA. "Effect of Capital Structure On The Performance Of Corporate Firms In Nigeria (A Study Of Financial And Manufacturing Sector)" Repository.mouau.edu.ng. Repository.mouau.edu.ng, 07 Jan. 2021, https://repository.mouau.edu.ng/work/view/effect-of-capital-structure-on-the-performance-of-corporate-firms-in-nigeria-a-study-of-financial-and-manufacturing-sector-7-2. Accessed 24 Nov. 2024.

MLA7

MOUAU/ACC/14/24712, ONYEMA. "Effect of Capital Structure On The Performance Of Corporate Firms In Nigeria (A Study Of Financial And Manufacturing Sector)". Repository.mouau.edu.ng, Repository.mouau.edu.ng, 07 Jan. 2021. Web. 24 Nov. 2024. < https://repository.mouau.edu.ng/work/view/effect-of-capital-structure-on-the-performance-of-corporate-firms-in-nigeria-a-study-of-financial-and-manufacturing-sector-7-2 >.

Chicago

MOUAU/ACC/14/24712, ONYEMA. "Effect of Capital Structure On The Performance Of Corporate Firms In Nigeria (A Study Of Financial And Manufacturing Sector)" Repository.mouau.edu.ng (2021). Accessed 24 Nov. 2024. https://repository.mouau.edu.ng/work/view/effect-of-capital-structure-on-the-performance-of-corporate-firms-in-nigeria-a-study-of-financial-and-manufacturing-sector-7-2

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