Effect Of Capital Structure On Corporate Performance: A Study Of Selected Companies In Nigeria. (A Study Of First Bank Nigeria Plc)

ABSTRACT

The study investigates the effect of capital structure on co-operate performance: A study of selected companies in Nigeria. The main objective of this study is to examine the extent to which capital structure influence corporate performance. The ex-post facto research design was adopted, the research adopted secondary data on getting the required information from first bank Nigeria plc was used in testing the hypothesis and use of structured questionnaire were also applied. Based on the findings obtained from the study the following conclusions were drawn. Debt/equity ratio significantly influences investment decisions in companies, with most investors preferring to invest in companies with a smaller debt/equity ratio. Also, it could be concluded from the above findings that the performance of a company is significantly related to the capital structure ratios Based on the findings of the study the following recommendations were made: Firms should endeavour to strike a fair balance between debt and equity and not to over depend on debt. Retained earnings should be the first source of financing a business venture before considering debt and equity. Where extra fund is needed, the company should preferably go for equity capital as the risk would be shared among the investors.