Determinants Of Financing Choice Of Listed Firms The Nigeria Experience

2304 words - 10 pages

1.0 Introduction
The discussion on how firms raise capital with regards to instruments used to finance investment decisions have generated a lot of academic debate amongst scholar’s in finance in recent past with scholar’s examining plausible reason why listed firms raise capital through primary listing, secondary listing or issuing debt using different combinations of instruments such ordinary equity, debt, hybrid securities such as preference shares, convertible and warrant debt etc.
Raising capital can be done through initial public offerings by private firms that have just gone public or by listed firms to raise additional equity through seasoned equity issue. The ...view middle of the document...

In the past four decade, much of the research on capital structure by academicians has advanced theoretical models to explain the capital structure patterns for firms and also to provide empirical evidence concerning whether the theoretical models have explanatory power when applied in real business world. Examining reasons behind the predilection of firms choosing their financing patterns the contributions of Modigliani and Miller's (1958, 1963) on the irrelevance of capital structure and tax shield advantage sets the stage upon which several capital structure theories have been developed.
Empirically, several studies have been conducted to investigate the relevance of capital structure in explaining a firms financing behaviour, amongst this the static trade-off theory, agency cost and pecking order model appears to come across strongly. The purpose of this study is to develop some preliminary ground work upon which a more detailed evaluation research could be based on. It is hoped to answer the question whether, and how closely, does the determinants of Nigeria firms’ capital structure support the Western finance theories (static trade-off, agency cost and pecking order models) while providing answers to Nigeria firms financing choice as it relates to their financial performance.
1.1 Aim
The main aim of this research is to assess the applicability of capital structure theories in determining and explaining choice of listed firms financing decisions in Nigeria. The study will look into the methods and tools reported in the literature and/or applied in practice.

1.2 Objectives
The major objective of this research is to determine:
1. Whether the main theories of capital structure (trade-off, agency and pecking order theories) explains financing behaviour for listed firms in Nigeria.
2. The impact of size on choice of capital structure for listed firms in Nigeria.
3. To examine the impact of stock volatility on choice of capital structure for listed firms in Nigeria.
4. To examine the impact of assets tangibility on choice of capital structure for listed firms in Nigeria.

1.3 Rationale
Generally previous studies on firms financing decisions have concentrated on testing efficiency, volatility and returns, liquidity and integration with world stock markets. Only recently, from the early 1990s, very few have tried to address the role of financial markets (with emphasis on banks rather than stock markets) in economic development Levine and Zervos (1993); Levine (1996), Bekaert and Harvey (1997), Bekaert, Harvey and Lundblad (2001). Very few have made some reference to Africa (Bekaert, Harvey and Lundblad (2001). The few African countries included in these researches are those that are relatively older, bigger or are performing better than others. Of interest have been stock markets such as the Johannesburg, Ghana, Nigeria, Lusaka and Zimbabwe stock exchanges.

The thesis proposes to link the literature on choice of corporate...

Other Papers Like Determinants Of Financing Choice Of Listed Firms The Nigeria Experience

Advantage of Debt Financing Essay

1467 words - 6 pages THE ADVANTAGE OF DEBT FINANCING Interest on debts paid by a corporation is deductible as an ordinary and necessary expense of the corporation . The general rule governing the interest taxation can be found in 26 U.S. Code § 163 : “There shall be allowed as a deduction all interest paid or accrued within the taxable year on indebtedness.” In other words, if the payments are categorized as interest, they will be deducted from the taxable

Assessment of the Mdgs in Nigeria

2207 words - 9 pages ASSESSMENT OF THE MILLENNIUM DEVELOPMENT GOALS IN NIGERIA INTRODUCTION The Millennium Development Goals (MDGs) which had been earlier discussed in the previous chapters are objectives set out by the United Nations (UN) in the year 2000 to upgrade its member states especially those that are classified as Third World Countries (TWCs) in the area of social and economic development. Nigeria is classified as a country in the Third World and

Nigeria and the Problem of Regional Integration

2036 words - 9 pages THE STORY OF NIGERIA during the postcolonial era has been one of a search for the constitutional and political arrangement that, while allowing for the self-expression of its socially and culturally diverse peoples, would not hinder the construction of a nation out of this mosaic. In this search, the country has experienced cycles of military and civilian rule, civil war, and peaceful reconstruction. If any nation typified political scientist

Promoting the Safety of Journalists in Nigeria

2468 words - 10 pages PROMOTING THE SAFETY OF JOURNALISTS IN NIGERIA. By Gbemiga Bamidele Journalism continues to be a very dangerous profession both in the peaceful arena as well as in conflict zones. In peace zones , despite the pessimistic democratization in Africa , government, politicians, economic and religious groups still see journalists as impostors who have no business in reporting ‘’critical issues’’ that to some extent affect these ‘’key players

Central Bank of Nigeria

3732 words - 15 pages over the assets and liabilities of the Nigerian Building Society. The FMBN provides banking and advisory services, and undertakes research activities pertaining to housing. Following the adoption of the National Housing Policy in 1990, FMBN is empowered to license and regulate primary mortgage institutions in Nigeria and act as the apex regulatory body for the mortgage finance industry. The financing function of the Federal Mortgage Bank of

Cultural Dimensions of Nigeria

2656 words - 11 pages , Nigerian music is also very diverse, with a wide range of genres and styles. Finally, business etiquette and formal greetings are quite foreign compared to the United State’s style, especially when it comes to meetings. Overall, Nigeria is a country with a very strong cultural sense, but is very different from the United States. Nigeria did not have much in the way of sports initially. It wasn’t until around 1963, when the National Sports

The Effect of Big Box Firms on Small Domestic Businesses

3311 words - 14 pages neutralize threats, as well as take advantage of the economies of scale and scope. Subsequently, this report touches upon the large scope effects of the Big Box Format; as well as addresses certain strategies that small businesses could apply and if they are realistic. Big Box Firms are organizations that undermine local business as well as entrepreneurialism and innovation. They are composed of Firms that occupy a minimum of 50,000 square feet of

Regulation of Systemically Relevant Firms

2256 words - 10 pages Thomas E. Augustyn Iowa School of Banking 2009 Intersession Project Banking Regulation Summary There is one legislative issue which will be ultimately responsible for the future direction and degree of bank regulation. This issue is the management/regulation of the financial services industry that contains “systemically relevant” (aka “too big to fail”) firms. Management & regulation goals must be 3-pronged: 1. It must be strong enough

The Choice of "Little Gidding"

1491 words - 6 pages Few pieces of modern literature have captured the atrocity and destruction of human conflict as T.S. Eliot’s “Little Gidding.” Eliot, drawing from his life as a Christian and his experience as an air raid warden during The Blitz, implores readers to make a choice between destruction and salvation, and it is this choice that drives the poem; Eliot’s hope is to use this portrait of a butchered London to urge readers to accept a Christian

The Impact of Microfinance Institution on the Economy of Nigeria

2628 words - 11 pages developing countries is predicated on poverty reduction prospect it offers. The Nigerian government cued into this popular thinking in 2005 when it inaugurated the microfinance banking scheme. This was founded to provide finance to economically active poor excluded from financing by conventional banks, provide employment, engender rural development and reduce poverty. This paper theoretically examines the impact of this institutions to Nigeria

Determinants Of Trade Balance Of Bangladesh

8001 words - 33 pages DETERMINANTS OF TRADE BALANCE OF BANGLADESH by Mohammad Habib Hossain A project submitted in partial fulfillment of the requirements for the degree of Professional Master in Banking and Finance Examination Committee: Dr. Donyaprueth Krairit (Chairperson) Dr. Sundar Venkatesh Dr. W.A. Wijewardena Nationality: Previous Degree: Bangladeshi Bachelor of Business Administration Khulna University Khulna, Bangladesh

Related Essays

Determinants Of Profitability Of Insurance Firms In Ghana

4344 words - 18 pages DETERMINANTS OF PROFITABILITY OF INSURANCE FIRMS IN GHANA Eric Kofi Boadi Koforidua Polytechnic, Koforidua, Ghana Samuel Antwi Koforidua Polytechnic, Koforidua, Ghana School of Finance and Economics, Jiangsu University, P.R. China Victor Curtis Lartey Koforidua Polytechnic, Koforidua, Ghana ABSTRACT The general objective of the study is to find out the determinants of the profitability of insurance firms in Ghana. Secondary data on

Internationalisation Of Firms Essay

591 words - 3 pages firms are operating their business in other countries. A company that seeks to act on a worldwide basis and not merely produce for the local market, is obliged to get through a number of stages of development. The company can enter into foreign markets even if it has low domestic sales and even if it didn’t get through the above mentioned procedure. This kind of companies try to organize their resources and sales in order to have competitive

The Power Of Choice Essay

1928 words - 8 pages individually, inside or outside the school. (John Kerr) • Outlines the skills, performances, attitudes, and values pupils are expected to learn from schooling. It includes statements of desired pupil outcomes, descriptions of materials, and the planned sequence that will be used to help pupils attain the outcomes. • The total learning experience provided by a school. It includes the content of courses (the syllabus), the methods employed

Healthcare Comparison Of The Usa And Nigeria

1025 words - 5 pages really is. The USA was a lot different from what I had heard from stories back home in Nigeria. The previous three years, since January 2009 to be precise, has provided me first-hand experience of some major differences between my country of origin and the United States of America. In comparison, there are four main differences between the lifestyle of the United States of America and Nigeria. First, one of the many significant differences