EFFECT OF CAPITAL STRUCTURE ON FINANCIAL PERFORMANCE OF AGRO-ALLIED COMPANIES IN NIGERIA

This study examined the effect of capital structure on financial performance of Agroallied companies in Nigeria. A panel data set of five (5) listed agro-allied firms of Nigeria for the period of 2010 to 2019 was selected to fulfill the objectives of the study. Ordinary Least Square (OLS), fixed effect and random effect estimation methods were used in the study for analysis while Hausman test was embraced to choose between the two methods. The financial performance was proxied by return on asset (ROA) and return on equity (ROE). The results showed that the coefficients of DER (Debt-Equity ratio) and asset turnover (AT) have negative insignificant effects on the performance of agro-allied companies while Age of firm (AF) has a statistically significant negative effect on performance of agro allied companies in Nigeria. Additionally, the result of return on equity showed that the coefficient of DER (Debt-Equity ratio) has a positive significant effect on the performance of agro-allied companies. Also, there is insignificant positive effect of asset turnover on the performance of agro-allied companies. The Age of firm has a statistically insignificant negative effect on performance of agro allied companies in Nigeria. The study concludes that capital structure is not a major determinant of firm performance. This study strongly recommends that corporate agro-allied firms should use more of equity than debt in financing their business activities.