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Impact of Corporate Growth Indicators on Financing Decision of Manufacturing Firms in Nigeria

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Impact of Corporate Growth Indicators on Financing Decision of Manufacturing Firms in Nigeria

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  • November 3, 2023
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Udeh, Amaka Patience1, Ejike, Chinedu Raphael2, & Okwo, Ifeoma Mary3
123Department of Accountancy, Enugu State University of Science and Technology, Enugu State, Nigeria

Abstract
The study examined the effect of corporate growth indicators on the financing decision of manufacturing in Nigeria. Total asset, earnings per share, and share price were the corporate growth indicators used for the study, while the debt-equity ratio was the dependent variable of the study. The study adopted an ex-post-facto research design, covering the period between 2012 and 2021. Secondary data were extracted from the annual reports and accounts of the sampled manufacturing firms in Nigeria. Pooled mean group regression analysis was used for the panel data analysis in line with the specific objectives of the study which is to ascertain the effect of total assets, earnings per share, and share price on the debt-equity ratio of manufacturing firms in Nigeria, it was revealed that total asset has a positive and significant effect on the debt-equity ratio of manufacturing firms in Nigeria in the long-run. However, share price and earnings per share have a negative and significant effect on the debt-equity ratio of manufacturing firms in Nigeria in the long run. The study, therefore, recommended that manufacturing firms are encouraged to identify and work on means to increase their total asset since it increases their debt-equity ratio. This is in line with static trade-off theory which argues that firms generally prefer debt as a source of finance because of tax consideration. they should always strive to increase their profitability because of the positive effect on the debt-equity ratio.

Keywords Corporate Growth Indicators; Financing Decision of Manufacturing Firms; Debt-Equity Ratio; Total Asset; Share Price; Earning per Share; Financing Decision

Citation Udeh, A. P., Ejike, C. R. & Okwo, I. M. (2023).  Impact of Corporate Growth Indicators on Financing Decision of Manufacturing Firms in Nigeria. International Journal of Advanced Finance and Accounting, 4(4), 70-81, https://doi.org/10.5281/zenodo.10068817  
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