This paper analyzes the effect of financial leverage on firms’ performance. The aim was to study the implications of financial leverage on firms performances. Also considering that maximizing accounting profit and maximizing shareholders value are not identical because of shareholders losses from agency costs, it was therefore pertinent to see how capital structure affect shareholders value.
The objective of the study was to identify the possible effects of financing leverage on the performance of the company, to establish the relationship between leverage and corporate performance of listed firms in Nigeria, to determine the extent to which capital structure affect shareholders returns, to determine when the shareholder’s wealth can be said to have been maximized given a particular capital structure and to analyze the debt and equity which might result in over capitalization of the firm. The research was designed to collect data through a survey method from five listed firms - Dangote Sugar Refinery, Nestle, Flour Mills, Cadbury, and Nigerian Breweries. Descriptive design (percentages) was used to explain the effect of financial leverage on company’s performance; while analytical design (correlational statistical method) was used to establish the relationship between financial leverage and corporate performance.
Inhaltsverzeichnis (Table of Contents)
- CHAPTER ONE: INTRODUCTION
- 1.1 Background to the Study
- 1.2 Statement of the Research Problem
- 1.3 Objectives of the Study
- 1.4 Research Questions
- 1.5 Research Hypothesis
- 1.6 Significance of the Study
- 1.7 Scope and limitation of the Study
- CHAPTER TWO: LITERATURE REVIEW AND THEORITECAL FRAMEWORK
- 2.1 Background Study of Cadbury Nigeria Plc
- 2.1.1 Brands
- 2.2 Review of Empirical Studies
- 2.3 Theoretical Framework
- 2.4 Conceptual Framework
- CHAPTER THREE: RESEARCH METHODOLOGY
- 3.0 Introduction
- 3.1 Population of the study
- 3.2 Sampling and sampling procedure
- 3.3 Sources of Data Collection
- 3.4 Primary Data
- 3.5 Method of data collection
- 3.6 Data analysis technique
- CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION
- 4.0 Introduction
- 4.1 Socio-Demographic Characteristics of the Respondents
- 4.2 Financial Leverage
- 4.3 Effect of Financial Leverage on Firm's Performance
- 4.4 Effect of Capital Structure on Shareholders' Returns
- 4.5 Hypotheses Testing
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper investigates the impact of financial leverage on the performance of listed firms in Nigeria. The study aims to understand the relationship between financial leverage, capital structure, and shareholder returns. It seeks to determine if and how a balanced capital structure can optimize firm performance and profitability.
- The effect of financial leverage on firm performance.
- The relationship between financial leverage and corporate performance.
- The impact of capital structure on shareholder returns.
- The identification of an optimal capital structure for maximizing shareholder wealth.
- The analysis of debt and equity levels to avoid over-capitalization.
Zusammenfassung der Kapitel (Chapter Summaries)
CHAPTER ONE: INTRODUCTION: This introductory chapter sets the stage for the research by providing background information on the study of financial leverage and its impact on firm performance. It clearly defines the research problem, outlining the gap in existing knowledge that the study addresses. The chapter also articulates the specific objectives of the research, focusing on the relationship between leverage, capital structure, and shareholder returns. The research questions and hypotheses are presented, along with a discussion of the study's significance and limitations, including the scope and the chosen methodology.
CHAPTER TWO: LITERATURE REVIEW AND THEORITECAL FRAMEWORK: This chapter provides a comprehensive review of existing literature on financial leverage and its effects on firm performance. It examines various empirical studies that have investigated similar topics, establishing a theoretical framework within which the current research is situated. The chapter also presents a conceptual framework that guides the research design and data analysis. A specific background on Cadbury Nigeria Plc is included, likely to contextualize the study within a relevant Nigerian business example.
CHAPTER THREE: RESEARCH METHODOLOGY: This chapter details the research design and methods employed in the study. It outlines the population of the study, the sampling techniques used (including the selection of five listed firms: Dangote Sugar Refinery, Nestle, Flour Mills, Cadbury, and Nigerian Breweries), and the data collection methods (a survey). The chapter also explains the data analysis techniques used, including both descriptive and analytical approaches (correlational statistical methods) to examine the relationship between financial leverage and corporate performance.
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION: This chapter presents and analyzes the data collected from the survey of the five listed firms. It presents socio-demographic characteristics of the respondents, followed by an analysis of financial leverage and its impact on firm performance, along with the effect of capital structure on shareholder returns. The chapter concludes by presenting the results of hypothesis testing, providing empirical evidence regarding the relationship between the variables under investigation. This chapter likely includes tables illustrating these findings (Tables 4.1-4.5 as referenced in the text).
Schlüsselwörter (Keywords)
Financial leverage, capital structure, firm performance, shareholder returns, corporate performance, Nigeria, listed firms, debt, equity, over-capitalization, correlational analysis, descriptive statistics.
Frequently Asked Questions: Impact of Financial Leverage on the Performance of Listed Firms in Nigeria
What is the main topic of this research paper?
This research paper investigates the impact of financial leverage on the performance of listed firms in Nigeria. It explores the relationship between financial leverage, capital structure, and shareholder returns, aiming to determine how a balanced capital structure can optimize firm performance and profitability.
What are the key objectives of the study?
The study aims to understand the relationship between financial leverage, capital structure, and shareholder returns. It seeks to determine the effect of financial leverage on firm performance, the relationship between financial leverage and corporate performance, the impact of capital structure on shareholder returns, and to identify an optimal capital structure for maximizing shareholder wealth, while analyzing debt and equity levels to avoid over-capitalization.
What is the structure of the research paper?
The paper is structured into four chapters. Chapter One provides an introduction, defining the research problem, objectives, and hypotheses. Chapter Two reviews relevant literature and establishes the theoretical framework. Chapter Three details the research methodology, including the population, sampling, data collection, and analysis techniques. Chapter Four presents, analyzes, and discusses the data collected, including hypothesis testing.
What methodology was used in this research?
The research employed a survey method, collecting data from a sample of five listed firms in Nigeria: Dangote Sugar Refinery, Nestle, Flour Mills, Cadbury, and Nigerian Breweries. The data analysis involved both descriptive and correlational statistical methods to examine the relationship between financial leverage and corporate performance.
What are the key findings expected from the study?
The study is expected to provide empirical evidence regarding the relationship between financial leverage, capital structure, and shareholder returns. The analysis will show the effect of financial leverage on firm performance and the impact of capital structure on shareholder wealth. The results will likely include tables illustrating the findings related to socio-demographic characteristics of respondents, financial leverage, its effect on firm performance, and the effect of capital structure on shareholder returns.
What are the key themes explored in the research?
Key themes include the effect of financial leverage on firm performance, the relationship between financial leverage and corporate performance, the impact of capital structure on shareholder returns, and the identification of an optimal capital structure for maximizing shareholder wealth. The study also addresses the analysis of debt and equity levels to avoid over-capitalization.
What are the limitations of the study?
The limitations are not explicitly detailed in the provided preview but are mentioned as a component of Chapter 1. Specific limitations would be discussed in the full research paper.
What are the keywords associated with this research?
Financial leverage, capital structure, firm performance, shareholder returns, corporate performance, Nigeria, listed firms, debt, equity, over-capitalization, correlational analysis, descriptive statistics.
- Quote paper
- Okolie Ugochukwu Jude (Author), 2021, Effect of Financial Leverage on Performance of Listed Firms in Nigeria, Munich, GRIN Verlag, https://www.grin.com/document/1305267
