CAPITAL STRUCTURE AND PERFORMANCE OF MANUFACTURING COMPANIES IN SOUTHWEST NIGERIA

ABSTRACT This study analyzed capital structure on financial performance of listed manufacturing companies in southwest, Nigeria. Specifically, the study examined the effect of debt on return on asset of listed manufacturing companies in southwest, Nigeria; assessed the effect of equity on return on asset of listed manufacturing companies in southwest, Nigeria and evaluate the effect of debt equity on return on asset of listed manufacturing companies in southwest, Nigeria. The study covered ten (10) firms randomly selected from all listed manufacturing companies in southwest, Nigeria. The study covered a period of five (5) years, 2014 to 2023; data used in the study were coursed from the annual report of firms sampled for the study. The study employed panel data analysis, in which financial performance was used to measure return on asset, while capital structure was proxied by debt, equity and debt equity. The study revealed that debt exerts significant positive effect on return on asset, with coefficient estimate of. 0.9619 (p=0.000 < 0.05), equity exerts significant negative effect on return on asset, with coefficient estimate of -2421.905(p=0.003 < 0.05) and debt equity exerts insignificant negative effect on return on asset, with coefficient estimate of -58.03436 (p=0.469 > 0.05) Based on the result of the study, it was concluded that capital structure has both negative and positive effect on the financial performance of listed manufacturing companies in southwest, Nigeria, especially when growth is measured in terms of return on asset.