Moderating Effect of Organizational Growth on Debt to Equity Ratio
- Post by: airjournals
- August 3, 2021
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ABSTRACT
This focus of this study is to examine the moderating effect of organizational growth on debt to equity ratio. The purpose of the study was to determine; to ascertain the moderating effect of organizational growth on debt to equity ratio. This study adopts the ex-post facto i.e. after the fact or event. The paper uses secondary data only extracted from the Annual Reports and Accounts of 16 sampled firms out of the insurance companies in Nigeria representing 50% of the population. Random sampling technique is employed to select the firms so as to ensure that all the firms have equal chance of representation and also depending on availability of data. Multiple regression is used as a tool of analysis for the study covering a period of 11 years (2006-2016) using Statistical Package for Social Scientists (SPSS). The population of this study is the thirty-two (32) quoted insurance firms on the Nigerian Stock Exchange (NSE) as at 31st December, 2016. The result of the study revealed that Growth has an insignificant negative effect on Debt to Equity Ratio. The study concluded that while growth, tangibility and age do not have significant effect on Debt to Equity Ratio of quoted insurance firms in Nigeria, size and profitability have significant effect on Debt to Equity Ratio. The study recommended that the impact of growth variable on capital structure should be considered by financial managers when making debt financing decisions. The increase in the Gross Premium of the Insurance firms should be sustained over the years through aggressive marketing strategy, competitiveness and introduction of new products and negative growth should be avoided as much as possible so as to avoid incurring debt and minimize the risk of bankruptcy.
Keywords: Organizational Growth; Debt to Equity; Nigerian Stock Exchange
Authorship
1Ugwu, Kevin Okoh, 2Obasuyi, George D., and 3Silas, Chinweze Echefu