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Re-examining the determinants of capital structure in Nigeria

Segun Thompson Bolarinwa (Department of Economics, Chrisland University, Abeokuta, Ogun State, Nigeria) (Fellow, Institute of Business Research, University of Economics, HCMC, Vietnam) (Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria)
Abiodun Adewale Adegboye (Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria)

Journal of Economic and Administrative Sciences

ISSN: 1026-4116

Article publication date: 24 July 2020

Issue publication date: 2 February 2021

854

Abstract

Purpose

The paper investigates the determinants of capital structure and the speed of adjustment of capital structure decisions of Nigerian firms.

Design/methodology/approach

The paper adopts three methods: difference GMM, system GMM and stochastic frontier analysis (SFA).

Findings

The empirical results show that firms' efficiency affects the capital structure decisions of Nigerian firms. At the same time, short-term debt has a higher speed of adjustment in the context of Nigerian firms. The roles of other control variables are established in the paper.

Social implications

Nigerian firms should adopt short-term debt in order to achieve their targeted debt levels. Managers of Nigerian firms are also advised to be more efficient in order to attract higher performance.

Originality/value

The paper is the first literature to measure the efficiency of firms using SFA method. Extant studies in the literature have neglected the determinant while four papers that adopt the determinant data envelope analysis (DEA) method. This is also the first study to document the speed of adjustment in capital structure decisions in the context of Nigerian firms.

Keywords

Citation

Bolarinwa, S.T. and Adegboye, A.A. (2021), "Re-examining the determinants of capital structure in Nigeria", Journal of Economic and Administrative Sciences, Vol. 37 No. 1, pp. 26-60. https://doi.org/10.1108/JEAS-06-2019-0057

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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