Moderating Effect of Capital Adequacy on The Relationship between Ownership Structure and Value of Listed Deposit Money Banks in Nigeria

This study examined the moderating effect of capital adequacy on the relationship between ownership structure and the value of listed deposit money banks in Nigeria. Specifically, it investigated the direct effects of managerial ownership, foreign ownership, and institutional ownership on firm value measured by Tobin’s Q, while assessing the conditioning role of the Capital Adequacy Ratio (CAR). The study adopted a quantitative ex post facto research design, using panel data from 12 listed deposit money banks over the period 2015–2024. Secondary data were obtained from audited annual reports and analysed using robust panel regression techniques, with appropriate diagnostic tests to address multicollinearity, heteroskedasticity, serial correlation, and model specification. The findings revealed that managerial ownership has a positive and statistically significant effect on firm value, whereas foreign ownership has no significant effect. Institutional ownership was found to exert a significant negative influence on firm value. Although capital adequacy did not demonstrate a strong direct effect on firm value, it significantly moderated the relationship between managerial ownership and firm value, weakening its positive impact, while it did not significantly moderate the effects of foreign and institutional ownership. The study therefore recommends that the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) encourage balanced managerial equity participation to strengthen incentive alignment without fostering entrenchment; that institutional investors be subjected to strengthened stewardship and engagement requirements to enhance active governance oversight; that foreign investment frameworks prioritize strategic, long-term participation with knowledge transfer components; and that capital regulation be integrated with corporate governance reforms to ensure that prudential requirements and ownership incentives jointly enhance firm value in the Nigerian banking sector.

Firm Value, Capital Adequacy, Managerial Ownership, Foreign ownership and Institutional ownership.

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