Open AccessCost of Capital and Corporate Earning of Nigeria Quoted Firms: A Multi-Dimensional Analysis of Quoted Firms in Nigeria
Author(s) -
Lucky Anyike Lucky
Publication year - 2017
Publication title -
australian finance and banking review
Language(s) - English
Resource type - Journals
eISSN - 2576-120X
pISSN - 2576-1196
DOI - 10.46281/afbr.v1i1.73
Subject(s) - implicit cost , cost of capital , cost of equity , proxy (statistics) , weighted average cost of capital , business , earnings , opportunity cost , lease , variable cost , economics , total cost , finance , accounting , profit (economics) , microeconomics , financial capital , capital formation , machine learning , computer science
This study examined cost of capital and corporate earning of quoted firms in Nigeria. The objective was to examine the effect of short term, medium term and long term cost of capital on earnings per share. Cross sectional data was sourced from financial statement of twenty quoted firms from 2011-2016. Earnings per share was proxy for dependent variable while cost of trade credit, cost of short term bank loans, cost of commercial paper, cost of banker acceptance, cost of line of credit, cost of revolving credit, cost of hire purchase, cost of operating lease, cost of debt, cost of preference share and cost of equity are proxy for independent variables. After cross examination of the validity of the pooled effect, fixed effect and the random effect, the study accepts the fixed and random effect models. Findings reveals that cost of short term and cost of long term have significant relationship with corporate earning while cost of medium term have no significant effect on corporate earnings. It recommends the need for corporate strategies that will reduce cost of capital.