Financial leverage and Firm Financial Performance in Nigeria: A Panel Data Analysis Approach

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Kenn-Ndubuisi, Juliet Ifechi
Kenn-Ndubuisi, Juliet Ifechi
2
Kenn-Ndubuisi
Kenn-Ndubuisi
3
Juliet Ifechi
Juliet Ifechi
4
Nweke
Nweke
5
Chijioke Joel
Chijioke Joel
1 Rivers State University

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GJMBR Volume 19 Issue C4

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This study examined the relationship between financial leverage and firm financial performance in Nigeria using 80 non-financial firms quoted on the Nigerian Stock Exchange from 2000 to 2015. The total debt to capital ratio, debt to equity ratio, cost of debt, debt to asset ratio and long term debt to capital ratios were proxies for financial leverage. Panel data technique in the form of the pooled regression model, fixed effect model, random effect model, and the marginal model had been applied to test hypotheses. The findings of the study revealed earnings per share is significant and negatively related to the debt to equity ratio and the total debt to total asset measures of financial leverage while the return on equity shows an insignificant relationship with the financial leverage measures in Nigeria while the direction of the relationship differs from one variable to the other. It was positive with the total debt to capital ratio and the cost of debt while the total debt to asset ratio, long term debt to capital ratios and the debt to equity ratio was negative.

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No external funding was declared for this work.

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The authors declare no conflict of interest.

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No ethics committee approval was required for this article type.

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Not applicable for this article.

Kenn-Ndubuisi, Juliet Ifechi. 2019. \u201cFinancial leverage and Firm Financial Performance in Nigeria: A Panel Data Analysis Approach\u201d. Global Journal of Management and Business Research - C: Finance GJMBR-C Volume 19 (GJMBR Volume 19 Issue C4): .

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GJMBR Volume 19 Issue C4
Pg. 13- 19
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Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

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GJMBR-C Classification: JEL Code: G19
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May 31, 2019

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English

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This study examined the relationship between financial leverage and firm financial performance in Nigeria using 80 non-financial firms quoted on the Nigerian Stock Exchange from 2000 to 2015. The total debt to capital ratio, debt to equity ratio, cost of debt, debt to asset ratio and long term debt to capital ratios were proxies for financial leverage. Panel data technique in the form of the pooled regression model, fixed effect model, random effect model, and the marginal model had been applied to test hypotheses. The findings of the study revealed earnings per share is significant and negatively related to the debt to equity ratio and the total debt to total asset measures of financial leverage while the return on equity shows an insignificant relationship with the financial leverage measures in Nigeria while the direction of the relationship differs from one variable to the other. It was positive with the total debt to capital ratio and the cost of debt while the total debt to asset ratio, long term debt to capital ratios and the debt to equity ratio was negative.

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Financial leverage and Firm Financial Performance in Nigeria: A Panel Data Analysis Approach

Kenn-Ndubuisi
Kenn-Ndubuisi
Juliet Ifechi
Juliet Ifechi
Nweke
Nweke
Chijioke Joel
Chijioke Joel

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