Vol. 3 No. 12 (2023)
Articles

EFFECT OF DEBT FINANCING ON SHAREHOLDERS WEALTH OF QUOTED MANUFACTURING FIRMS IN NIGERIA

Dibua, Ekene C.
Department of Accountancy, Paul University, Awka. dibuaekene@gmail.com
Ikilidih, Joy N.
Department of Accountancy, Paul University, Awka. joynkechi131@gmail.com

Published 2023-12-20

Keywords

  • Debt financing,
  • shareholders wealth,
  • Debt-to-capital ratio,
  • Earnings per share

How to Cite

Dibua, Ekene C., & Ikilidih, Joy N. (2023). EFFECT OF DEBT FINANCING ON SHAREHOLDERS WEALTH OF QUOTED MANUFACTURING FIRMS IN NIGERIA. Research Journal of Management Practice, 3(12), 1-12. https://www.openjournals.ijaar.org/index.php/rjmp/article/view/310

How to Cite

Dibua, Ekene C., & Ikilidih, Joy N. (2023). EFFECT OF DEBT FINANCING ON SHAREHOLDERS WEALTH OF QUOTED MANUFACTURING FIRMS IN NIGERIA. Research Journal of Management Practice, 3(12), 1-12. https://www.openjournals.ijaar.org/index.php/rjmp/article/view/310

Abstract

This study examined the effect of Debt financing on shareholders wealth of quoted manufacturing firms in Nigeria using Debt-to-capital ratio and earnings per share. Ex Post Facto research design was adopted. Data were extracted from the sampled firms for period of eleven (11) years covering from 2010-2020. Data were analyzed with descriptive statistics and Coefficient of Correlation and Panel Least Square (PLS) regression analysis was employed by the study to test the hypothesis via E-view 10.0. Data analysis revealed an inverse relationship exists between debt-to-capital ratio and earnings per share. In conclusion, this study found that debt financing has a significant effect on shareholders wealth creation at 5% level of significance. Based on the findings, it was recommended that considering the negative relationship between Debt-to-capital ratio and earnings per share, the firm managers should be careful when considering options of financing and should preferably use internal source of financing such as using owners capital, retained profit and selling assets.

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