IMPACT OF CAPITAL STRUCTURE ON THE FINANCIAL PERFORMANCE OF LISTED PHARMACEUTICAL COMPANIES IN NIGERIA 2014-2023

ABSTRACT This study examined the effect of the effect of capital structure on the financial performance of listed pharmaceutical firms in Nigeria. The study specifically investigated the effect of short-term debt to total asset (SDTA), long-term debt to total asset (LDTA) and total debt to total asset (TDTA) on the financial performance. The study adopted return on asset (ROA) for the measures of financial performance. The study covered the period of ten (10) years spanning from 2014 – 2023. Ex-post facto research design was utilized in the study and four (4) listed pharmaceutical firms were selected for sample size. Annual report and financial statement of the selected firms were the research instrument utilized in the study. Secondary source and panel data were used to generate inferences for the study. Eview was used as statistical tool and descriptive statistics were used in this study. Panel least square which includes fixed effect and random effect were to test hypotheses at 5% level of significance. The study found that short-term debt has significant and negative effect on the financial performance of listed pharmaceutical companies in Nigeria. Furthermore, it was discovered that long-term debt has insignificant and positive influence on the financial performance of listed pharmaceutical companies in Nigeria. Finally, it was disclosed that total debt has insignificant and positive impact on the financial performance of listed pharmaceutical companies in Nigeria. Therefore, the study concluded that capital structure has significant effect on the financial performance. Hence, it recommended that the companies should have excellent debt management system in place in order ensure that both short term and long term stability of the firm is not threaten with accumulation of huge debt.