THE EFFECT OF CAPITAL STRUCTURE ON PERFORMANCE

THE EFFECT OF CAPITAL STRUCTURE ON PERFORMANCE

Abstract

Capital structure decision is fundamental for the survival of business organizations. Previous researchers have reported conflicting results on the relationship between capital structure and performance. Thus, this study examines the effect of capital structure on firm performance in Nigeria. Data were obtained from annual reports of the companies from 2007-2011. Correlation analysis was employed in analyzing the data. The findings revealed that that each of DC, DCE, SDTD and AGE is significantly and positively related to ROE. Meanwhile, LDC is significantly but negatively related to ROE. Similarly, each of DC, DCE, SDTD and AGE is significantly and positively related to ROA. However, LDC is significantly and negatively related to ROA. The hypotheses tested confirmed that there is significant relationship between capital structure and financial performance using both ROA and ROE. The study contributes to the body of knowledge in financial management. Future researchers could carry out similar studies in small and medium scale industry.

TABLE OF CONTENT

Title page- – – – – – – – – i
Approval page – – – – – – – -ii
Dedication – – – – – – – – -iii
Acknowledgement – – – – – – – -iv
Abstract – – – – – – – – – -v
Table of content – – – – – – – -vi

CHAPTER ONE
INTRODUCTION – – – – – – – -1
1.0 Background of the study – – – – -1
1.1 Statement of the problem – – – – -5
1.2 Purpose of the study – – – – – -6
1.3 Significance of the study – – – – -8
1.4 Research questions – – – – – -9
1.5 Scope of the study – – – – – – -10

CHAPTER TWO

LITERATURE REVIEW – – – – – – -11

CHAPTER THREE

Research methodology – – – – – – -39
Design of study – – – – – – – -40

CHAPTER FOUR

Presentation, analysis and interpretation of data – -48

CHAPTER FIVE

Summary of findings – – – – – – -60
Conclusion – – – – – – – – -61
Recommendations – – – – – – – -62
Suggestions for further research – – – – -64
References – – – – – – – – -65
Appendix I – – – – — – – – -68
Questionnaire. – – – – – – – -69

THE EFFECT OF CAPITAL STRUCTURE ON PERFORMANCE