EFFECT OF CAPITAL STRUCTURE ON THE PERFORMANCE OF NIGERIA MANUFACTURING FIRM (2008-2023)

ABSTRACT: Corporate managers often grapple with the challenge of determining the optimal blend of stock and debt in their capital structure to effectively enhance returns and maximise the value of their organisation. This study seeks to evaluate the impact of capital structure on the financial performance of industrial companies listed in Nigeria. The population for this study comprises all manufacturing firms listed on the Nigeria Stock Exchange. However, due to time constraints, this research focuses solely on one manufacturing company from the aforementioned firms. The accounting reports of this company, specifically those as of December 31st, serve as the sample for analysis. The study employed secondary data sourced from the yearly financial report of the selected firm spanning the years 2008 to 2023. This data was collected from the official website of the Nigeria Stock Exchange. The research design employed in this study was ex-post facto, which aimed to investigate the association between independent and dependent variables, while also accounting for the influence of other variables. The study employed descriptive statistics and hierarchical multiple regression analysis to examine the formulated hypothesis. The study revealed a statistically significant and favourable correlation between a firm's capital structure and its corporate financial performance. The study suggests that it is advisable to issue stock and debt at an optimal level. This is because when the amount of debt increases, there is a potential shift in the capital structure from internal control to external control. It is imperative for organisations to take into account the combination of stock and debt, as these factors have a significant role in shaping corporate performance. The study also suggests that there is a strong positive correlation between the debt equity ratio and returns on assets. Additionally, it finds a significant relationship between capital employed and returns on investment in Nigerian manufacturing firms. The key concepts explored in this study include capital structure, firm performance, return on equity, return on debt, and capital employed.