Corporate Capital Structure and Corporate Market Value: Empirical Evidence from Nigeria
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Canadian Center of Science and Education
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.
Capital structure , Size , Market value , Non-financial firms
Oboh, S.C, Isa, E.F and Adekoya, A.C (2012) Corporate Capital Structure and Corporate Market Value: Empirical Evidence from Nigeria. International Journal of Economics and Finance, Vol.4(12).