Chapter 1-5

ABSTRACT

The debt-to-equity ratio of a firm determines how cash flows will be shared between debt holders and equity holders. In reality, capital structure of a firm is difficult to determine. Financial managers are difficult to exactly determine the optimal structure. The main objective of this study is to determine the effect of capital structure on the performance of quoted Manufacturing firms in Nigeria. The study used multiple regression analysis of the ordinary least square analysis in testing the hypothesis considered in this study, and the statistical analysis was done using SPSS. The result reveal that, Leverage has significant effect on the performance of quoted Manufacturing firms in Nigeria showing that firm that has high profitability and good performance have less debt. It is therefore recommended that, management of quoted manufacturing firms should work very hard to improve the leverage of their quoted Manufacturing firms in order to increase the returns on equity, return on assets and investment. They can do that by ensuring that capital structure is optimal.

TABLE OF CONTENTSTitle PageiCertificationiiDedication iiiAcknowledgement ivAbstract  vCHAPTER ONEINTRODUCTION1.1Background of the study 11.2Statement of the problem 61.3Objectives of the study 71.4Justification of the study 71.5Research questions 91.6Statement of hypothesis101.7Scope of the study101.8Definition of terms11CHAPTER TWOLITERATURE REVIEW 2.0Introduction132.1Conceptual review142.1.1.1Concept of capital structure142.1.1.2Importance of capital structure162.1.1.3Factors influencing the choice of capital structure172.1.2Capital structure and cost of capital192.1.3Concept of firm performance202.1.3.1Measurement of firm performance212.1.4Capital structure and financial gearing242.1.5Types of leverage262.1.6Capital structure and firm performance292.2Theoretical review of the study332.2.1Exogenous growth theory332.2.2Capital structure theory342.2.3Trade-off theory of capital structure342.2.4Pecking order Theory352.2.5Agency cost theory352.3Empirical review of the study36CHAPTER THREERESEARCH METHODOLOGY 3.1Research design 433.2Population of the study 433.3Sample technique and Sample Size433.4Sources of data 443.5Model Specification443.6Measurement of Variables 45 3.7Method of Analysis45CHAPTER FOURDATA PRESENTATION AND ANALYSIS 4.1Introduction464.2Data presentation474.2.1Determinants of effect of leverage on the performance of Nigeria quoted manufacturing firms514.3Effect of leverage on return on equity of Nigeria quoted manufacturing firms 524.4Discussions of findings53CHAPTER FIVESUMMARY, CONCLUSION AND RECOMMENDATIONS5.1Summary 565.2Conclusion 575.3Recommendations 57  BIBLIOGRAPHY59APPENDIX66