Capital Structure Decisions and Shareholders’ Wealth Maximization of Quoted Consumer Goods Companies in Nigeria

Jeremiah Patrick EDET; B.Sc.; M.Sc.; ACA; Samuel Sunday CHARLIE; Ph.D; CNA

doi:10.56201/jafm.v10.no9.2024.pg355.381

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Capital Structure Decisions and Shareholders’ Wealth Maximization of Quoted Consumer Goods Companies in Nigeria

Jeremiah Patrick EDET, B.Sc., M.Sc., ACA, Samuel Sunday CHARLIE, Ph.D, CNA

Abstract

Capital structure decisions are done deliberately by managers of quoted companies with the expectation of achieving optimal benefits for the shareholders. An appropriate mix of the debt and equity in the capital structure will go a long way in maximizing shareholders’ wealth. In quoted consumer goods companies in Nigeria, debt and equity capital have been used together in financing total assets and it is expected that optimal benefits get to the shareholders who are the real owners of companies. Hence, this study was conducted to examine the influence of capital structure decisions on shareholders’ wealth maximization of quoted consumer goods companies in Nigeria from the period of 2013 to 2022. The ex-post facto research design was employed in the study. The population was made up of twenty-one (21) quoted consumer goods companies in Nigeria on the floor of Nigerian Exchange (NGX) Group as at December 2022 and fifteen (15) entities were sampled for the study. The dependent variable was Shareholders’ Wealth Maximization (MCA) while the independent variable was Capital Structure Decisions (CSD) measured by Long-Term Debts (LTD) and Total Equity (TE). Panel data were collected from annual reports and financial statements of the sampled entities from 2013 to 2022. The sourced data were analyzed using descriptive and inferential statistics. Pooled panel linear regression technique was used in the study. From the analyses, it was discovered that LTD and TE had positive and significant influence on MCA of quoted consumer goods companies in Nigeria. It was concluded, by the researcher, that capital structure decisions had positive and significant influence on shareholders’ wealth maximization of quoted consumer goods companies in Nigeria. It was recommended that long-term debt capital should be sourced more and invested appropriately on viable investment opportunities with higher maturity period more than the duration of the long-t

Keywords

Capital Structure DecisionsShareholders’ Wealth Maximization and Quoted

References

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Capital Structure Decisions and Shareholders’ Wealth Maximization of Quoted Consumer Goods Companies in Nigeria

Abstract

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