FIRM CHARACTERISTICS AND CAPITAL STRUCTURE OF LISTED FOOD AND BEVERAGES FIRMS IN NIGERIA

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Author

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Department of Administration

ABSTRACT

The study examines the effect of firm characteristics on the capital structure of listed food and beverages companies in Nigeria from the perspective of pecking order and trade off theories. The study uses secondary data collected by means of documentation for the period of ten years ranging from 2005-2014. The research design employed was correlational in nature. 
The hypotheses formulated for the study were tested by means of two multiple regression equations. The findings of the study on one hand show that non-debt tax shields has no significant effect on the companies’ leverage, but in the case of growth opportunity, firm size and assets tangibility, positive statistical significant relationships were established. On the other hand, profitability has been established to show significant negative relationship with leverage. The study concludes that firm characteristics have significant effect on financing mix of the companies under investigation. 

Therefore, the study recommends that companies should be wary of increasing debt finance in their financing mix by only taken into cognizance of these firm specific attributes. Finance managers should carefully consider the costs of taken on more debts and painstakingly strike a balance between the costs of debt and their eventual benefits thereof. Finally, regulatory authorities should come up with flexible rules that will enable companies have easy access to long term debt financing option.

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