Corporate Capital Structure and Corporate Market Value: Empirical Evidence from Nigeria | Zendy

Collins Sankay Oboh | Zendy; Isa Envulu Filibus | Zendy; Adekoya Adeleke Clement | Zendy

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Corporate Capital Structure and Corporate Market Value: Empirical Evidence from Nigeria

Author(s) -

Collins Sankay Oboh,

Isa Envulu Filibus,

Adekoya Adeleke Clement

Publication year - 2012

Publication title -

international journal of economics and finance

Language(s) - English

Resource type - Journals

eISSN - 1916-9728

pISSN - 1916-971X

DOI - 10.5539/ijef.v4n12p193

Subject(s) - capital structure , market value added , market value , leverage (statistics) , equity (law) , economics , financial economics , corporate finance , equity value , debt to equity ratio , pecking order theory , debt ratio , enterprise value , book value , debt , monetary economics , finance , internal debt , debt levels and flows , population , demography , machine learning , sociology , computer science , political science , law , nonprobability sampling , earnings

Within the context of the Modigliani-Miller relevance theory and the static order theory of capital structure, this paper empirically examined the effect of a firm’s capital structure on its market value. Dataset from 39 non-financial listed companies for the period of 2005-2009 were used for analysis. Results from the regression analysis show a significant and positive relationship between non-financial firms’ market values and their debt-equity ratios. Whereas, a negative relationship exists between a firm’s total-debt/total-capital ratio and its market value, its size positively affects its market value. Hence, we conclude that firms’ leverage positively influence their market values. Suggesting that, a firm can actually attain an optimal capital structure.

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