EFFECT OF CAPITAL STRUCTURE ON PERFORMANCE OF LISTED OIL AND GAS COMPANIES IN NIGERIA

Abstract

This study seeks to understand how capital structure affects quoted Nigerian oil and gas firms' performances. Eight oil and gas corporations quoted on the Nigerian Exchange (NGX) were chosen for this study using a population sample approach based on yearly reports spanning thirteen years (2009 to 2021). Long-term debt to total debt ratio (LTD), short-term debt to total debt ratio (STD), total debt to equity ratio (TDE), and rate of interest coverage (INC) are the independent variables considered in this study. Performance is measured using the dependent variable return on asset (ROA). In this study, the data is analyzed using multiple regression and descriptive statistics. According to this study, oil and gas companies' capital structures significantly depend on debt financing. According to the regression results, there is a positive but non-significant association between short-term debt to total debt ratio and ROA (r = 0.064). Long term debt to total debt ratio shows a negative but non-significant link with ROA, the total debt to equity ratio indicated a positive but non-significant influence on ROA. Finally, the interest coverage ratio has a positive but non-significant influence on ROA (r = 0.135). The study's findings recommend adding more factors to the model when assessing how capital structure affects company performance. Future studies are advised to investigate the effect of capital structure on company performance utilizing sectors not included and more research variables.