Corporate Debt Financing and Portfolio Investment Decisions: Evidence from Quoted Industrial Goods Manufacturing Firms in Nigeria

Abstract

This study examined the effect of corporate debt financing on the portfolio investment of quoted industrial goods manufacturing firms in Nigeria. Secondary data obtained from 15 quoted industrial goods manufacturing firms from 2012 - 2021 obtained from the Nigerian Stock Exchange Fact book and annual reports of the quoted industrial goods manufacturing firms. The study modeled portfolio investment as the function of long term debt as percentage of total assets, long term debt as percentage of total capital, long term debt as percentage of total equity capital, short term debt as percentage of total assets, short term debt as percentage of total capital and short term debt as percentage of total equity capital. Panel data methodology is employed while the fixed effects model is used as estimation technique at 5% level of significance. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit. The study found that 51 percent changes in the value of portfolio investment of the quoted industrial goods manufacturing firms were traced to changes in long term debt financing variables as modeled in the regression model. long term debt to total assets and long term debt to total equity are negatively related to portfolio investment while long term debt total capital have positive effect on portfolio investment of the quoted industrial goods manufacturing firms. 40.5 percent changes in the value of portfolio investment of the quoted industrial goods manufacturing firms were traced to changes in long short term debt financing variables as modeled in the regression model. short term debt to total assets and long term debt to total equity are negatively related to portfolio investment while short term debt total capital have positive effect on portfolio investment of the quoted industrial goods manufacturing firms, there is no significant relationship betw

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