Capital Structure and Return on Capital Employed of Construction Companies in Nigeria

Abstract

This study examined the impact of capital structure on return on capital employed of construction firms in Nigeria. The data for the study was obtained from the annual report and accounts of the sampled firms. The study employed panel data analysis and pooled regression, fixed-effect and random-effect estimation techniques for the analysis and Stata 12.0 was used. The study concluded that capital structure has a negative impact on return on capital employed of the sampled construction companies in Nigeria. The study recommends that the managers of the construction companies should be careful while using debt as a source of finance; they should try to finance their activities with retained earnings and use debt as a last option.