OGBULU,Onyemachi (Ph.D)and EMENI, Francis Kehinde (ACA)
In the finance literature, there has been growing interest in what determines the capital structure of firms. The existing literature is concerned with the determinants of capital structure in more developed economies. This paper aims to extend this literature by ascertaining the determinants of capital structure in an emerging economy like Nigeria. In this paper, it is hypothesized that there is no relationship between gearing (CAPSTR) and the size, growth, profitability, tangibility and age of a firm. Using a cross-sectional survey data from 110 firms listed on the Nigerian stock exchange and analysis of data by the OLS method, it was found that size has a positive and significant impact on capital structure while age has a negative and significant influence. Tangibility (TANG), growth of a firm (GROWTH) and profitability (PROF), on the other hand, do not have any significant impact on the capital structure of firms in Nigeria. Based on this finding, some recommendations were made; prominent amongst which was that, directors of companies in Nigeria should pay more attention to two key CAPSTR indicators (size and age) when taking financing decisions.
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