An Empirical Investigation of Companies in an Emerging Economy of Financing Options for Non-Financial Companies in Relation to the Shareholder Value, The Case Study of Nigeria

Abstract

ABSTRACT: Purpose: In order to contribute to the discussion that there are major differences in the financing alternatives accessible in developed and developing economies, this paper examines the relationship between a firm's financing options and shareholders' value in the context of emerging markets. Design/methodology/approach: This study analysed characteristics that could help determine how firms in Nigeria finance their operations and possibly generate value for shareholders by drawing on market timing theory and panel data regression estimation. For the years between 2007 and 2016, information from 87 non-financial companies listed on the Nigerian Stock Exchange was used (10 years). Findings: We discover that businesses prefer equity-based financing because it increases shareholder value. The Hausman test result showed that the fixed-effects model was adequate, and the model's outcomes also closely matched those of the panel regression estimate to firmly support our findings.