Influence of Macroeconomic Variables on Capital Structure Decision of Manufacturing Companies in Nigeria
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Abstract
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Tvariables and stock market development on the capital structure decisions
of manufacturing companies in Nigeria for the period from 1998 to 2013.
The study was conducted under three independent periods the same period, one
quarter after and one year after the announcement of the macroeconomic
variables. Data from sample of 40 manufacturing companies quoted in the
Nigeria Stock Exchange were analyzed using descriptive statistics and Newey and
West (1987) standard error. The findings indicate that changes in gross domestic
product (GDP) significantly influence capital structure decision of
manufacturing companies in Nigeria only in the quarter after the announcement
of the GDP figure, while interest rate, inflation and stock market development did
not support capital structure decision making by manufacturing companies in
Nigeria in all the three periods. This support the salient notion that there is
actually a marginal delay in the adaptation of GDP as determinant for financing
decision making. The study recommends that, those in charge of making such
decisions should monitor and follow the trend of GDP and probably other
monetary policies of the Federal Government and regulatory authority that
affects GDP in their decision making. Government should also initiate policies
that will discourage manufacturing company from over dependence on equity but
encourage the use of long term debts that could guarantee growth in the real
sector.
Keywords
H Social Sciences (General), HB Economic Theory, HG Finance