The Impact of Lease Financing on Financial Performance of Nigerian Oil and Gas Industry

Abstract

This study is about lease financing and financial performance of companies. It aimed at examining the impact of lease financing on the financial performance (measured by Return on Asset (ROA)) of Nigerian oil and gas companies. The data for the study was collected from annual reports and accounts of 6 sampled companies in the Nigerian Oil and Gas industry, that are engaged in lease financing and were also listed on the Nigerian Stock Exchange (NSE) not later than January, 2005. Robust OLS regression analysis is used to analyze the impact of lease financing on return on assets (ROA). The results of the study revealed that lease financing has significant impact on the ROA of oil and gas companies in Nigeria. Therefore, the research recommends that firms should embrace lease financing as a method of financing their operations as evidence suggests that value is added through the use of lease financing.

Keywords: lease finance, operating lease, finance lease, financial performance, Return on Asset