DEBT AND EQUITY ASSET COMPOSITION ON FIRM VALUE OF LISTED CONSUMER GOODS FIRMS IN NIGERIA

Abstract

Firm value can be said to be a clear expression of a firms’ worth in the business environment in which it operates and is reflected in its profits generated with the share price as a sign of risk and returns from investment made by investors. This study examines debt and equity asset composition on firm value of listed consumer goods firms in Nigeria. Proxies to measure this are debt to total assets and equity to total assets, while the firm value is proxied by Tobin’s Q. The study concentrated on the period from 2016 to 2022. Panel data was used to analyse the data sourced from the individual financial reports of the listed consumer sectors. The sample adopted eighteen (18) listed consumer goods firms out of the twenty (20) listed consumer goods firms in Nigeria. The study employed panel regression model to estimate the key relationship between debt and equity asset composition and firm value. The result shows that equity to total assets had significant effect on Tobin’s Q, while debt to assets have no significant effect on Tobin’s Q of listed consumer goods firms in Nigeria. The study recommended that the management of the consumer goods firms should minimize debt financing due to the high interest rate and the volatility of market, this might negatively affect firm value while floating of their shares through equity financing, strengthening ownership structure, which will improve existing shareholders confidence and enhance firm value