Corporate Capital Structure and Corporate Market Value: Empirical Evidence from Nigeria

Oboh Sankay Collins, Isa Envulu Filibus, Adekoya Adeleke Clement

Abstract


Within the context of the Modigliani-Miller relevance theory and the static order theory of capital structure, this paper empirically examined the effect of a firm’s capital structure on its market value. Dataset from 39 non-financial listed companies for the period of 2005-2009 were used for analysis. Results from the regression analysis show a significant and positive relationship between non-financial firms’ market values and their debt-equity ratios. Whereas, a negative relationship exists between a firm’s total-debt/total-capital ratio and its market value, its size positively affects its market value. Hence, we conclude that firms’ leverage positively influence their market values. Suggesting that, a firm can actually attain an optimal capital structure.


Full Text: PDF DOI: 10.5539/ijef.v4n12p193

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This work is licensed under a Creative Commons Attribution 3.0 License.

International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

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