Implications of Equity Capital Financing on Corporate Financial Performance of Deposit Money Banks in Nigeria

Abstract

This study examines the implications of equity capital financing on the corporate financial performance of deposit money banks in Nigeria, as such, 14 banks listed on Nigerian Stock Exchange for a period of 11 years (2006-2016) was selected. The data used is secondary in nature; extracted from the Annual Reports and Accounts of the various Banks and employed ex-post facto research design, and Pooled Ordinary Least Square Method in the analysis. It made use of panel data structure and the data was analysed with E-View package (version 13). Also, the P and T values assisted in the analysis of both magnitude and direction of the relationship between the independent and dependent variables. It also revealed that both ROE AND EVA has a positive effect on the corporate financial performance of Deposit Money Banks in Nigeria. The study concludes that Equity financing has positive effect on corporate financial performance of Deposit Money Bank in Nigeria; therefore, Increasing this variable will bring a positive effect on the corporate financial performance of Deposit Money Banks in Nigeria. It recommends that the implications of scheduling banks capital into equity financing, short-term debt and long-term debt by managers should be closely supervised and monitored by both shareholders and bondholders’ so as to avoid the company adding negative value to them who are contributors of finance.

Keywords: Return on Equity, Deposit Money Banks, Economic Value Added, Equity Capital Financing

DOI: 10.7176/RJFA/10-12-11

Publication date:June 30^th 2019