Determinants of Debt Financing in Nigeria
Keywords:
asset tangibility, profitability, non debt tax shield, firm growth and firm sizeAbstract
This study examines the debt financing determinants within corporations based on the annual time series data between 2008 to 2018 using Panel Least Square technique (PLS). The findings show that asset tangibility, profitability, non-debt tax shield, firm growth and firm size are statistically significant in explaining the variation in debt policy. The result also shows that there is a positive relationship between asset tangibility, profitability, non-debt tax shield and debt policy while, the result exhibits a negative relationship between firm growth, firm size and debt policy. It is therefore recommended that management needs to increase efficiency by maximizing the use of debt in the capital structure option.
References
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in Ghana. Journal of Risk Finance, 6(5), 438-445.
Abor, J. (2007). Agency theories determinants of debt levels: Evidence from Ghana. Review of
Accounting and Finance, 7(2), 183-192.
Ahmed, N., & Wang, Z. (2011). Determinants of capital structure: An empirical study of firms in
manufacturing industry of Pakistan. Managerial Finance, 37(2),117-133.
Bokpin, G.A., & Arko, A. C. (2009). Ownership structure, corporate governance and capital
structure decisions of firms: Empirical evidence from Ghana. Studies in Economics and
Finance, 26(4), 246-256.
Bryan, S., Nash, R., & Patel, A. (2005). Can the agency costs of debts and equity explain the
changes in executive compensation during the 1990s? Journal of Corporate Finance,
2005, 1-20.
Buferna, F., Bangassa, K., & Hodgkinson, L. (2005). Determinants of Capital Structure:
Evidence from Libya. Research Paper Series 8, University of Liverpool.
Cespedes, J., Gonzalez, M. & Molina, C.A. (2010). Ownership and capital structure in Latin
America. Journal of Business Research, 63, 248-254.
Chen, J.J. (2004). Determinants of capital structure of Chinese listed companies. Journal of
Business Research, 57, 1341- 1351.
Christopher F.B., Schafer D., & Talavera O. (2006). “The Effects of Short-term Liabilities on
Profitability: The Case of Germany”, Discussion Paper of D/W Berlin
Çitak L, & Ersoy E, (2012). “The Determinants of Corporate Debt Ratio: An Empirical Analysis
on Turkish Corporations”. Int.l Res. J. Finan. Economics; 95:151-162.
De Miguel & Pindado (2001), “Determinants of the Capital Structure: New Evidence from
Spanish Data”, Journal of Corporate Finance, 7, 77–99.
Drobetz, W. & Fox, R. (2005). “What Are the Determinants of the Capital Structure”? Same
Evidence for Switzerland” Swiss Journal of Economics and Statistics. 151(1), 71-114.
Ellili O.D, & Farouk S (2011). “Examining The Capital Structure Determinants: Empirical
Analysis of Companies Traded on Abu Dhabi Stock Exchange”. Int. Res. J. Finance.
Economics., 67:82-96.
Ezeoha, A. E., & Okafor, F. O. (2010). Local corporate ownership and capital structure decisions
in Nigeria: a developing country perspective. Corporate Governance, 10(3), 249-260
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firms: Managerial behaviour, agency
costs and ownership structure. Journal of Financial Economics, 3, 305-360.
Karadeniz, E., Kandir, S. Y., Balcilar, M. & Onal, Y. B. (2009). Determinants of capital
structure: evidence from Turkish lodging companies. International Journal of Contemporary Hospitality Management, 21(5), 594- 609.
Madan, K. (2007). An analysis of the debt-equity structure of leading hotel chains in India.
International Journal of Contemporary Hospitality Management, 19(5), 397-414.
Modigliani, F. & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of
investment. American Economic Review, XLVII(3), 261-282.
Mutamimah. (2003). “Analisis Struktur Modal Pada Perusahaan-Perusahaan Non Finansial Yang
Go Public Di Pasar Modal Indonesia”. Journal Business Strategic. 11, 1-60.
Myers, S.C. (1984). The capital structure puzzle. Journal of Finance, XXXIX (3), 575-592.
Myers, S.C. & Majluf, N.S. (1984). Corporate financing and investment decisions when firms
Have information that investors do not have. Journal of Financial Economics, 13, 187-
221.
Nyamita, M. O., Garbharran, H. L. & Dorasamy, N. (2013). Factors influencing debt financing
decisions of corporations–theoretical and empirical literature review. Problems and
Perspectives in Management, 12 (4): 189-202.
Omran, M. M., & Pointon, J. (2007). Capital structure and firm characeristics: An empirical
analysis from Egypt. Review of Accounting and Finance, 8 (4), 454-474
Oyesola, S.R. (2007). An Empirical Analysis of the Capital Structure of Selected Quoted
Companies in Nigeria, International Journal of Applied Economics & Finance, 1 (1).
Ozkan A. (2001), “Determinants of capital structure and adjustment to long-run target: evidence
from UK company panel data”, Journal of Business Finance & Accounting 28, 175-198.
Sayilgan G, & Karabacak H, G (2006). “The Firm-Specific Determinants of Corporate Structure:
Evidence from Turkish Panel Data”. Investment Management and Financial Innovations
3(3):125-139.
Shahjahanpour A, Ghalambor H, & Aflatooni A (2010). “The Determinants of Capital Structure
Choice in the Iranian Companies”. Int. Res. J. Finan. Economics, 56:167-178.
Su, L.D. (2010). Ownership structure, corporate diversification and capital structure: Evidence
from China's publicly listed firms. Management Decision, 48(2), 314-339.
Tauringana, V., & Clarke, S. (2000). The demand for external auditing: Managerial share
ownership, size, gearing and liquidity influences. Managerial Auditing Journal, 15(4),
160-168.
Teker, D., Tasseven, O. & Takel, A. (2009) ”Determinants of Capital Structure for Turkish
Firms: A Panel Data Analysis”. International Research Journal of Finance and
Economics 29: 180- 187.
Zhang, R., & Kanazaki, Y. (2007). Testing statictrade-odd against pecking order models of
capital structure in Japanese firms. International Journal of Accounting and Information
Management, 15(2), 24-36.
in Ghana. Journal of Risk Finance, 6(5), 438-445.
Abor, J. (2007). Agency theories determinants of debt levels: Evidence from Ghana. Review of
Accounting and Finance, 7(2), 183-192.
Ahmed, N., & Wang, Z. (2011). Determinants of capital structure: An empirical study of firms in
manufacturing industry of Pakistan. Managerial Finance, 37(2),117-133.
Bokpin, G.A., & Arko, A. C. (2009). Ownership structure, corporate governance and capital
structure decisions of firms: Empirical evidence from Ghana. Studies in Economics and
Finance, 26(4), 246-256.
Bryan, S., Nash, R., & Patel, A. (2005). Can the agency costs of debts and equity explain the
changes in executive compensation during the 1990s? Journal of Corporate Finance,
2005, 1-20.
Buferna, F., Bangassa, K., & Hodgkinson, L. (2005). Determinants of Capital Structure:
Evidence from Libya. Research Paper Series 8, University of Liverpool.
Cespedes, J., Gonzalez, M. & Molina, C.A. (2010). Ownership and capital structure in Latin
America. Journal of Business Research, 63, 248-254.
Chen, J.J. (2004). Determinants of capital structure of Chinese listed companies. Journal of
Business Research, 57, 1341- 1351.
Christopher F.B., Schafer D., & Talavera O. (2006). “The Effects of Short-term Liabilities on
Profitability: The Case of Germany”, Discussion Paper of D/W Berlin
Çitak L, & Ersoy E, (2012). “The Determinants of Corporate Debt Ratio: An Empirical Analysis
on Turkish Corporations”. Int.l Res. J. Finan. Economics; 95:151-162.
De Miguel & Pindado (2001), “Determinants of the Capital Structure: New Evidence from
Spanish Data”, Journal of Corporate Finance, 7, 77–99.
Drobetz, W. & Fox, R. (2005). “What Are the Determinants of the Capital Structure”? Same
Evidence for Switzerland” Swiss Journal of Economics and Statistics. 151(1), 71-114.
Ellili O.D, & Farouk S (2011). “Examining The Capital Structure Determinants: Empirical
Analysis of Companies Traded on Abu Dhabi Stock Exchange”. Int. Res. J. Finance.
Economics., 67:82-96.
Ezeoha, A. E., & Okafor, F. O. (2010). Local corporate ownership and capital structure decisions
in Nigeria: a developing country perspective. Corporate Governance, 10(3), 249-260
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firms: Managerial behaviour, agency
costs and ownership structure. Journal of Financial Economics, 3, 305-360.
Karadeniz, E., Kandir, S. Y., Balcilar, M. & Onal, Y. B. (2009). Determinants of capital
structure: evidence from Turkish lodging companies. International Journal of Contemporary Hospitality Management, 21(5), 594- 609.
Madan, K. (2007). An analysis of the debt-equity structure of leading hotel chains in India.
International Journal of Contemporary Hospitality Management, 19(5), 397-414.
Modigliani, F. & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of
investment. American Economic Review, XLVII(3), 261-282.
Mutamimah. (2003). “Analisis Struktur Modal Pada Perusahaan-Perusahaan Non Finansial Yang
Go Public Di Pasar Modal Indonesia”. Journal Business Strategic. 11, 1-60.
Myers, S.C. (1984). The capital structure puzzle. Journal of Finance, XXXIX (3), 575-592.
Myers, S.C. & Majluf, N.S. (1984). Corporate financing and investment decisions when firms
Have information that investors do not have. Journal of Financial Economics, 13, 187-
221.
Nyamita, M. O., Garbharran, H. L. & Dorasamy, N. (2013). Factors influencing debt financing
decisions of corporations–theoretical and empirical literature review. Problems and
Perspectives in Management, 12 (4): 189-202.
Omran, M. M., & Pointon, J. (2007). Capital structure and firm characeristics: An empirical
analysis from Egypt. Review of Accounting and Finance, 8 (4), 454-474
Oyesola, S.R. (2007). An Empirical Analysis of the Capital Structure of Selected Quoted
Companies in Nigeria, International Journal of Applied Economics & Finance, 1 (1).
Ozkan A. (2001), “Determinants of capital structure and adjustment to long-run target: evidence
from UK company panel data”, Journal of Business Finance & Accounting 28, 175-198.
Sayilgan G, & Karabacak H, G (2006). “The Firm-Specific Determinants of Corporate Structure:
Evidence from Turkish Panel Data”. Investment Management and Financial Innovations
3(3):125-139.
Shahjahanpour A, Ghalambor H, & Aflatooni A (2010). “The Determinants of Capital Structure
Choice in the Iranian Companies”. Int. Res. J. Finan. Economics, 56:167-178.
Su, L.D. (2010). Ownership structure, corporate diversification and capital structure: Evidence
from China's publicly listed firms. Management Decision, 48(2), 314-339.
Tauringana, V., & Clarke, S. (2000). The demand for external auditing: Managerial share
ownership, size, gearing and liquidity influences. Managerial Auditing Journal, 15(4),
160-168.
Teker, D., Tasseven, O. & Takel, A. (2009) ”Determinants of Capital Structure for Turkish
Firms: A Panel Data Analysis”. International Research Journal of Finance and
Economics 29: 180- 187.
Zhang, R., & Kanazaki, Y. (2007). Testing statictrade-odd against pecking order models of
capital structure in Japanese firms. International Journal of Accounting and Information
Management, 15(2), 24-36.
Published
2020-10-06
How to Cite
Abdulmumin, A. B. (2020). Determinants of Debt Financing in Nigeria: Array. EuroEconomica, 39(3). Retrieved from https://dj.univ-danubius.ro/index.php/EE/article/view/405
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