Capital structure and financial performance of listed natural resource firms in Nigeria
DOI:
https://doi.org/10.33003/fujafr-2026.v4i2.374.163-172Keywords:
capital structure, debt-to-equity ratio, long-term leverage, current leverage, NigeriaAbstract
Purpose: This study examines how various capital structure ratios affected the performance of natural resource firms in Nigeria.
Methodology: Panel data covering 2015 to 2024 was collated from the four (4) listed natural resource firms on the Nigerian Exchange Group (NGX). The study employed the Fixed-Effects panel regression technique after establishing its suitability for the data through the Hausman test.
Results and conclusion: The findings indicate that long-term leverage responds positively, albeit insignificantly, to the asset efficiency ratio of the natural resources sector of Nigeria. The findings also indicate that while current leverage significantly enhances the asset efficiency ratio of the natural resources sector, the gearing ratio significantly depletes the net returns of firms in the sector. The study concludes that current leverage has significantly enhanced asset efficiency, but debt-to-equity impairs the net returns accruing to assets in Nigeria's natural resources sector.
Implication of findings: This result suggests that corporate performance in the sector responds to, and is more sensitive to, leverage than to a blend of leverage and equity in its capital structure. Hence, the debt-to-equity mix needs to be moderated while maintaining current leverage levels to enhance asset productivity in the sector.
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