Gearing and Performance of Selected Listed Companies in Nigeria

Abstract

Corporate performance is one of the most discussed issues as this appears to be pivotal to the existence of any concern. The study investigated gearing (debt and equity) as a driver of the performance of selected listed companies on the Nigerian Stock Exchange (NSE). The going concern convention of most companies is threatened by their continuous need to perform in profit and wealth maximization of those organizations. This study adopted ex-post facto research design. The population comprised 170 listed companies on Nigerian Stock Exchange (NSE) as at December 2018. The study revealed that gearing have significant effect on performance of selected companies in Nigeria (Adj.R²=0.180, F _{(28, 170)}=0.111, P<0.05). The study also revealed that debt ownership had positive and significant effect on Return on capital employed (R^2. =0.19, β₁ =27.75 t₍₁₂₄₎ = 3.628, P <0.05). Equity ownership had positive significant effect on the dividend growth (R²=52.7%, β₁ = 23.61, t₍₁₂₄₎ = 2.638, P<0.05). The study concluded that gearing affected performance of selected listed companies in Nigeria. The study therefore recommended that government should make a policy that will encourage a balanced gearing structure of listed companies that will enhance performance that will engender confidence.