American International Journal of Social Science

Capital Structure and Profitability of Nigerian Quoted Firms: The Agency Cost Theory Perspective
Ishaya Luka Chechet, Abduljeleel Badmus Olayiwola

Abstract
This work examined capital structure and profitability of the Nigerian listed firms from the Agency Cost Theory perspective with a sample of seventy (70) out of population of two hundred and forty-five firms listed on the Nigerian change (NSE) for a period of ten (10) years: 2000 - 2009 with the aid of the NSE Fact Book covering the period under review. Panel data for the firms are generated and analyzed using fixed-effects, random-effects and Hausman Chi Square estimations. Two independent variables which served as surrogate for capital structure were used in the study: debt ratio, DR and EQT while profitability as the only dependent variable. The result show that DR is negatively related with PROF, the only dependent variable but EQT is directly related with PROF. The study by these findings, indicate consistency with prior empirical studies and provide evidence against the Agency Cost Theory.

Full Text: PDF