CAPITAL STRUCTURE AND CORPORATE PERFORMANCE OF LISTED PHARMACEUTICAL COMPANIES IN NIGERIA
Abstract:This study examined capital structure and
corporate performance of listed pharmaceutical companies in Nigeria. The study
specifically analyzed the impact of short-term debt (STD), long term debt (LTD)
and Firms Size (FZ) on return on equity (ROE). The study focused on five
pharmaceutical companies listed on the Nigeria stock exchange. Secondary data
were collected from annual reports of sampled pharmaceutical companies over a
period of six years (2012-2017) and were analyzed using descriptive analysis,
correlation analysis, pooled OLS estimator, fixed effect estimator, and random
effect estimator and Hausman test. The most consistent and efficient estimator
revealed that short term debt exerts insignificant positive effect on return on
equity, with coefficient estimate of 0.094800 (p=0.0946> 0.05), effect of
long-term debt is negative and significant, with coefficient estimate of
-0.302446 (p=0.0094< 0.05), and firms size exert insignificant negative
impact on return on equity, with coefficient estimate of -0.026763
(p=0.3892> 0.05). The study concluded that using large proportion of debt
significantly influence the performance of pharmaceutical companies in Nigeria.
The study recommends that firms should consider the mixture of equity and debt
for better performance of the organization, since they are major determinants
of corporate performance.