The effects of Capital structure on the financial performance of large industrial listed firms in Nigeria

Abstract

This research was aimed at exploiting the dynamic relationship between leverage and the value of the firm using the panel data of Nigerian firms couple with the use of partial adjustment model to establish the determinants of capital structure in Nigeria in relation with the main theories, it was observed that short term leverage constitute substantial proportion of the capital structure , while the concepts of  trade-off theory and the pecking order theory could not adequately explain the capital structure decision in Nigeria, however there was a strong relationship between the leverage level and the value of the firm. It was also observed that the speed of adjustment to the target capital structure of Nigerian firm is relatively high when compared to the findings of western developed economies.

Keywords : Capital structure, Leverage, Target capital structure, Value of the firm and     Adjustment speed