Abstract
The debate on the optimal capital structure has continued unabated over time. This is in view of the importance of capital structure in the attainment of organisational objectives. Different studies have come out with contrasting findings on the effect of capital structure on financial leverage. Consequently, this study was carried out to investigate the effect of firm characteristics on financial leverage using industrial goods firms listed in Nigerian Exchange Group. The broad objective of this study was to evaluate the effect of firm characteristics on financial leverage of industrial good firms in Nigeria. The independent variables of the study was firm characteristics which was proxied by firm size, firm profitability, asset tangibility, market value and the composite effect of firm characteristics, while the dependent variable was proxied by financial leverage. Ex-post-facto research design was adopted. The population of the study consisted of thirteen (13) listed industrial goods firms listed on the Nigerian Exchange Group while a sample size of twelve (12) was taken after dropping the firm which did not meet the requirement for inclusion. The data for the study were extracted from the annual reports and accounts of the sampled companies for the years 2013 to 2022. The data were analysed with descriptive statistics, correlation and panel regression. The E-view statistical packages version 10 was used to analyse the data. The result from the Haussmann test statistics reveals that firm size had a negative and non-significant effect on financial leverage of industrial good firms in Nigeria. Furthermore, firm profitability had a positive and significant effect on financial leverage of industrial good firms in Nigeria, firm asset tangibility recorded a positive non-significant effect on financial leverage of industrial good firms in Nigeria, market value had a negative and non-significant effect on financial leverage of industrial good firms in Nigeria and composite effect of firm characteristics had a significant effect on financial leverage of industrial good firms in Nigeria. The study therefore concluded that the firm characteristics have significant effect on the financial leverage of industrial goods. Based on the above conclusion from the findings of the study, it was recommended amongst others that, firms should increase their scales of operations through increase in liquidity and put these to efficient use in order to enjoy economies of scale. The size of the assets of the firm must not be too large compared to the investment of the firm’s businesses so that it can be managed effectively and efficiently.
Keywords
Firm Characteristics, Financial Leverage, Listed Industrial Goods Firms, and Nigeria.
Citations
IRE Journals:
Stella Thomas Effiong , Eno Gregory Ukpong
"Firm Characteristics and Financial Leverage of Listed Industrial Goods Firms in Nigeria" Iconic Research And Engineering Journals Volume 7 Issue 7 2024 Page 295-311
IEEE:
Stella Thomas Effiong , Eno Gregory Ukpong
"Firm Characteristics and Financial Leverage of Listed Industrial Goods Firms in Nigeria" Iconic Research And Engineering Journals, 7(7)
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