Analysis of Firm Characteristics on Leverage of Industrial Companies in Nigeria

Abstract

This study analyzed the effect of firm characteristics on the leverage of industrial companies in Nigeria for a 16 years period covering 2007-2022. This study specifically ascertained the effect of firm characteristics on the debt-to-equity of industrial companies. Panel data was used in the study, obtained from Nigerian Exchange Group Fact Books and related companies’ annual financial reports of sampled industrial goods listed companies. Ex-Post Facto research design was employed and analyzed using a panel regression analysis. Variance inflation factor, Multicollinearity test and heteroskedasticity were applied to test the study’s hypothesis. The result revealed that growth opportunities positively affect the leverage of industrial companies by 135.77%. The study recommends among other things that industrial companies strive to increase sales so as to enhance the profitability of firms which increases their liquidity level, increasing the equity of firms and monitor that leverage acquired is channeled into viable investments.