Impact of Capital Structure on Insurance Firms’ Performance in Nigeria

Abstract

The study investigates the impact of capital structure on firm’s performance (Insurance companies) in Nigeria for a period of 5 years (2011-2015) for a sample size of 12 insurance companies. Data were collected from the audited financial statement of insurance companies in Nigeria. Data collected were analyzed with the use of ordinal least square (panel regression). From our findings, it was observe that long term debt to total assets and total debt to total assets are negatively related to firm performance Return on assets. It is hereby recommended that firms should use more of equity than debt in financing their business operation; this is because as much it is important that the value of a business should be enhanced with debt capital, it gets to point that it becomes unfavorable. Hence, each firm should choose an appropriate debt-equity mix that maximizes it value and minimizes it cost of capital.