The International Institute for Science, Technology and Education (IISTE)
Abstract
This study investigated the effect of capital structure on corporate performance in Nigerian using randomly selected companies. This was done because it has at been established that an overall good performance of firms in an economy will lead to economic development in the long run. Twenty companies operating in the Nigerian environment were randomly picked and data on their capital structure and profit were picked out from their annual reports for the period under investigation (i.e. 2012-2013). In order to accomplish the set out objectives of this study, a research hypothesis was formulated which was tested via a number of analytical techniques. These are the panel unit root test and the panel least squares regression. Based on the results gotten, Ho was rejected. The results revealed that capital structure negatively influenced corporate performance. The study ended by recommending that Nigerian companies should use debt as a source of finance sparingly and only when extremely necessary. Keywords: Net income theory, Net operating income theory, Trade-off theory
