Re-examining the determinants of capital structure in Nigeria
Journal of Economic and Administrative Sciences
ISSN: 1026-4116
Article publication date: 24 July 2020
Issue publication date: 2 February 2021
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
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