Capital Structure and Financial Performance of Listed Manufacturing Companies in Nigeria
Despite numerous empirical studies, the relationship between capital structure and financial performance of firms still provokes debate. Therefore, this study examined the impact of capital structure on the financial performance of consumer goods manufacturing companies between 2012 and 2021. The study's methodology involved the panel regression models using the fixed effect and random effect models. The study found that while short-term debt has a negative impact on return on assets, economic value added, and return on equity, it has a positive impact on return on assets and economic value added and an insignificant impact on return on equity; similarly, long-term debt has a negative and insignificant impact on return on assets, earnings per share, while having a positive and significant impact on return on equity and economic value added. The study also found that total debt had a positive but insignificant effect on economic value added and return on assets. The study also found that total equity has a negative but insignificant effect on return on assets and earnings per share. Total debt has a positive and statistically significant impact on earnings per share. Total equity has a positive and statistically significant on return on equity while having a positive but not statistically significant on economic value added. Therefore, based on its tax benefits, the study advised consumer goods manufacturing companies to think about using more debt in their mix of capital structure as this will lower their overall cost of capital. Keywords: Economic Value Added, Capital structure, Return on…