The Influence Of Debt Financing On Corporate Profitability Of Deposit Money Banks Quoted On The Nigerian Stock Exchange
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Abstract
It is of special significance to analyze the corporate financial performance of firms because of managers attempt to maintain company’s stability and expansion. This study examines the possible association of debt financing as factor assumed to influence corporate profitability of deposit money banks quoted on the Nigerian stock exchange. This study employs a correlational research design using a cross- sectional panel data of ten years from 2005 to 2014 with the objective of examining the influence of independent variables such as financial leverage, proxied by debt to total equity and capital structure, proxie'd by-long term debt to total asset on the dependent variable such as corporate profitability, proxied by -ROE and ROA. Populations of the study are the fifteen deposit money banks quoted on the Nigerian ; stock exchange as at 2015. The study therefore utilised Yamanc’s sampling .technique to arrive at five banks which are arbitrarily selected thereby giving a fair representation of the entire population. Multiple regression is used with the aid of statistical packages for social science (SPSS) to determine and analyze the influence of independent variables on the dependent variable and the nature of relationship that exist. ‘ • among the variables. The study finds positive but insignificant influence of debt- financing (die .and ltdta)- t on corporate profitability (ROE) and insignificantly negative .influence on corporate profitability . (ROA). ■ ^ -The -study therefore recommends that profitable firms depends more on-debt financing ,and-s6, more . - T attention be, paid to the source of finance particularly, .when roe is used' as a proxy.-