Firm Size and Capital Structure of Selected Listed Firms in the Oil and Gas Industry in Nigeria
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Date
2022
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International Journal of Innovative Research in Accounting and Sustainability
Abstract
The ability of a business to get loans and use internal resources to purchase assets that would increase its size is a key factor on how strong the relationship between firm size and capital structure holds true. In light of this, this study examined the effect of capital structure on firm size of a few listed oil and gas businesses in Nigeria, ten-year (2011 to 2020) being the research period. Data were obtained from audited financial statements of seven firms from the industry. The data were on total assets, leverage, non-current liability finance, and total liability finance. Hausman test confirmed the suitability of fixed effect model. The results showed that equity financing significantly increases firm size. A significant positive effect was also found for Total Liability Finance Contrarily, Non-Current Liability Finance and Leverage both exhibited positive but not statistically significant effects on company size. These results supported certain previous studies while refuting others. The conclusion is that capital structure has a positive and significant effect on firm size and that other factors significantly affect firm size. In order to maximize firm size for the overall benefit of shareholders, this study advised that capital structure and the other factors that have been identified as having effect on firm size should be properly taken into account