Equity Financing and Firm Value in Nigeria
- July 31, 2020
- Posted by: RSIS
- Categories: IJRISS, Management
International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue VII, July 2020 | ISSN 2454–6186
Equity Financing and Firm Value in Nigeria
Auwalu Sani Ibrahim1, Hadiza Sabo2, Sunusi Kabiru3, Sharafuddeen Ibrahim Abubakar4
1,2,3,4Department of Management Science, Kano State College of Education and Preliminary Studies
Abstract:- This study investigates the influence of equity financing on firm value in Nigeria using panel analysis technique for 12 listed industrial goods enterprises from 2006 to 2016. The estimate reveals that equity finance reduce the capacity of firm value in Nigeria. It is also discovered that the firm size and growth have negative influence on the value of frim. Hence, the study suggests that managers should design appropriate management skills to come up with the efficient capital mix in financing firm business. This could be through taking into consideration of various theoretical application and the weakened nature of the economy in the best combination of capital for viable business operation.
Keywords: Equity financing, value of firms, firm size, growth, Nigeria.
I. INTRODUCTION
Nowadays, firm’s business operation in the world has been on deteriorating trend due to improper capital combination (Aziz &Abbas 2019). The crucial decision on the best capital mix for better performance of business operation in developing world is worrisome. In ability of large sum of debt to maximize firm operation, particularly, in developing economies like Nigeria have drawn back and collapse of a significant number of firms the country. An analysis based on the Nigerians stock exchange market reveals that in a decade almost 46 percent of listed enterprise have lose substantially for debt financing. This scenario may be attributed to lack and poor management to take decision on the appropriate capital combination for business operation. In finance theory, disagreement exists with respect to the bearing of capital mix on firm performance. The traditional view of corporate capital combination and valuation holds the existence of viable capital mix, and thus the firm performance can be increased through a judicious financing mix(Saunders, Lewis, & Thornhill 2009). Several studies and theoretical affiliation has been discuss on the optimal capital structure and its applicability for high yield business performance (Brealey & Myers 2003). Therefore, adopting a suitable measure could guide firms to pull out from such issues related to equity finance and value of firms in Nigeria. This study contributes in the existing literature by studied the influence of equity finance on firm performance in Nigeria as most these studies are concentrated in developed nations and very few in African nations. This will help managers and stakeholders in making efficient management decisions with the regard to appropriate capital combination for greater firm performance.
