IMPACT OF LEVERAGE ON FINANCIAL PERFORMANCE OF QUOTED FIRMS IN NIGERIA
Abstract
ABSTRACT
This study determined the degree at which debt-equity ratio influences the firm performance and determined the degree at which debt ratio influences the firm performance of quoted firms in Nigeria. These were with a view to providing information on the effects of financial leverage on firm performance of quoted firms in Nigeria. Ex-post facto research design was employed using secondary source of data. The study population comprised of 104 quoted non-financial firm and 29 firms were purposively selected. Sample period covered years 2014 to 2023 and data were sourced from audited financial statements of the selected firms. Data were analysed using descriptive statistics, correlation analysis and inferential statistics. The inferential statistics was carried out by employing panel multiple regression method. The study found that debt ratio had significant impact on the firm performance of quoted firms in Nigeria. It was also found that debt-equity ratio had no significant impact on the firm performance of quoted firms in Nigeria. The study concluded that leverage of organizations are vital in enhancing the profitability and performance of organizations in Nigeria. It was recommended that management of firms should be careful in their use of debt as revealed in the findings that firms are highly geared. They should increase their commitment to debt as a source of finance and ensure it is used optimally to finance the assets in order to enhance their performance.
Keywords: debt, debt-equity, leverage, performance, quoted firms, Nigeria,
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