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Impact of capital structure on financial performance of oil and gas firms in Nigeria

Author

Listed:
  • Obumneme Renato Anozie

    (Nile University of Nigeria Abuja)

  • Taiwo Adewale Muritala

    (Nile University of Nigeria Abuja)

  • Victor Edet Ininm

    (Nile University of Nigeria Abuja)

  • Nurudeen Salako Yisau

    (Fountain University Osogbo)

Abstract

This study examines the impact of capital structure on the financial performance of Nigerian oil and gas companies. Using an ex-post facto research methodology, the short-term debt to total asset, long-term debt to total asset, total debt to total equity, and return on asset variables were investigated as proxies for capital structure and financial performance, respectively. Based on the data's availability at the time of the inquiry, the study used an easy sampling strategy to gather secondary data. These data covers the years 2011 through 2020 and were compiled from the annual financial reports of five Nigerian oil and gas companies. Descriptive statistics and panel regression analysis were used to analyze the data. The analysis' findings shows that while long-term debt to total assets has a negative significant influence on return on assets, short-term debt to total assets and total debt to total equity had positive insignificant impacts. According to the findings, managers of oil and gas companies should reduce the amount of long-term debt they have because doing so has a negative effect on their performance. They should also exercise caution when making capital structure decisions.

Suggested Citation

  • Obumneme Renato Anozie & Taiwo Adewale Muritala & Victor Edet Ininm & Nurudeen Salako Yisau, 2023. "Impact of capital structure on financial performance of oil and gas firms in Nigeria," Future Business Journal, Springer, vol. 9(1), pages 1-9, December.
    • Handle: RePEc:spr:futbus:v:9:y:2023:i:1:d:10.1186_s43093-023-00186-4
    DOI: 10.1186/s43093-023-00186-4
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Capital structure; Financial performance; Oil and gas firms; Nigeria;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects

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