EFFECT OF FIRM SPECIFIC CHARACTERISTICS ON FINANCIAL LEVERAGE OF QUOTED DIVERSIFIED COMPANIES IN NIGERIA

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EFFECT OF FIRM SPECIFIC CHARACTERISTICS ON FINANCIAL LEVERAGE OF QUOTED DIVERSIFIED COMPANIES IN NIGERIA

ABSTRACT

Financial decision of a firm has continued to constitute concern amongst managers, analysis,

researchers, scholars as well as policymakers. This study investigates the Effect of Firm

Specific Characteristics on Financial Leverage of Quoted Diversified Companies in Nigeria.

The population of the study is the six (6) Diversified Firms listed on the Nigerian Stock

Exchange as at 31st December 2014. The study took a census approach of all the six (6)

Listed Diversified Firms over the period of the study. Multiple regression technique using

Ordinary Least Square (OLS) was employed in analyzing the panel data obtained from

audited annual reports and accounts of the sampled firms for the period 2007-2014. The

findings of the study revealed that, complexity of business, profitability, growth opportunity

and the moderating effect of growth opportunity and profitability on financial leverage were

found to be statistically significant. Dependency on external finance, the moderating effect of

growth opportunity and complexity of business on financial leverage and the moderating

effect of growth opportunity and dependency on external finance on financial leverage were

found to be statistically insignificant. The study recommends among others that, management

of quoted diversified companies in Nigeria should encourage diversification in line of

businesses that their streams of revenue or income are not positively correlated. This can be

done by seeking growth opportunities in industries where they can further diversify their

business to break in revenue or which will allow them to conveniently finance their

subsidiaries and reduce their bankruptcy risk through borrowing.

TABLE OF CONTENT

Title page- – – – – – – – – i

Approval page – – – – – – – -ii

Dedication – – – – – – – – -iii

Acknowledgement – – – – – – – -iv

Abstract – – – – – – – – – -v

Table of content – – – – – – – -vi

CHAPTER ONE

INTRODUCTION – – – – – – – -1

1.0 Background of the study – – – – -1

1.1 Statement of the problem – – – – -5

1.2 Purpose of the study – – – – – -6

1.3 Significance of the study – – – – -8

1.4 Research questions – – – – – -9

1.5 Scope of the study – – – – – – -10

CHAPTER TWO

LITERATURE REVIEW – – – – – – -11

CHAPTER THREE

Research methodology – – – – – – -39

Design of study – – – – – – – -40

CHAPTER FOUR

Presentation, analysis and interpretation of data – -48

CHAPTER FIVE

Summary of findings – – – – – – -60

Conclusion – – – – – – – – -61

Recommendations – – – – – – – -62

Suggestions for further research – – – – -64

References – – – – – – – – -65

Appendix I – – – – — – – – -68

Questionnaire. – – – – – – – -69

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