Relationship Between Firm Financing Structure and Share Price of Non-Financial Firms in Nigeria
- Post by: airjournals
- September 7, 2021
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The purpose of this study is to investigate the relationship between firm financing structure and share price of quoted non-financial firms in Nigeria. In a more specific term, the study investigated the effect of debt to equity, debt to asset, market capitalization, and firm size on share price of the selected non-financial firms in Nigeria. A sample was selected from Samples of 75 companies listed in the Nigerian exchange limited for the period of ten years spanning 2010 to 2019 was selected and studied. Ex-post facto and cross-sectional research design was adopted. The secondary data were sourced from annual reports and accounts of the selected non-financial firms quoted in Nigeria Exchange Limited. Analytical techniques employed were pairwise Granger causality and Pearson Product Moment Correlation (PPMC) mechanism. Result shows an insignificant positive relationship between share price of non-financial firms in Nigeria. Also, result of the pairwise Granger causality showed that there is no causal relationship between DETA and SP (p>0.05), between DETE and SP (p>0.05), between MCAP and SP (p>0.05), and between FSIZE and SP (p>0.05), which implies that changes in the debt financing structure are independent of changes in share price of non-financial firms in Nigeria. In line with the findings, it was suggested that share price should be monitored independently from capital structure of non-financial firms in Nigeria.
Keywords: Financial Leverage; Financing Structure; Market Capitalization; Firm Size
1Nwobodo, Azuka Tina, 2Prof. Ezeabasili, Vincent and 3Orjinta, Ifeoma Hope