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ABU Journal, Department Of Public Administration

Year: 2014|   Volume No: 3|   ISSN: 2360-9664|   Page No: 


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Title:  

AN ASSESSMENT OF DETERMINANTS OF CAPITAL STRUCTURE OF CHEMICALS AND PAINTS COMPANIES IN NIGERIA

MUHAMMAD SHEHUTIJJANI

DEPARTMENT OF ACCOUNTING, FACULTY OF ADMINISTRATION AHMADU BELLO UNIVERSITY, ZARIA, NIGERIA 

ABSTRACT

Every firm needs fund for its daily runnings or business expansions. This fund is referred to as capital. Capital of firms when sourced, it becomes a burden on enterprises simply because it is other persons’ resources which they are to compensate as they derive maximum benefits from it. It is, therefore, a symbol of  a company’s financial liabilities. This paper examines the determinants of capital structure in the Chemicals & Paints Companies in Nigeria. The study uses secondary data from annual reports and NSE fact book which contains the nine Chemicals & Paints companies in Nigeria as at 2010. The period used for the study is from 2005 to 2009. The paper finds that profitability, tangibility and age have significant impact on the capital structure, and, as such, rejects the hypotheses formulated in their respect. Growth and size have no significant impact on the capital structure of Chemicals & Paints companies in Nigeria and, hence, could not have sufficient evidence to reject their hypotheses. The paper concludes that only Age has positive coefficient and significant impact on the capital structure. Both profitability and tangibility have negative coefficient but significant impact on the capital structure of Chemicals & Paints companies in Nigeria. Based on this, the paper recommends that Chemicals & Paints companies should consider their position using the above variables as benchmark before embarking on debt financing decisions.

SUMMARY:

Every firm needs fund for its daily runnings or business expansions. This fund is referred to as capital. Capital of firms when sourced, it becomes a burden on enterprises simply because it is other persons’ resources which they are to compensate as they derive maximum benefits from it. It is, therefore, a symbol of  a company’s financial liabilities. This paper examines the determinants of capital structure in the Chemicals & Paints Companies in Nigeria. The study uses secondary data from annual reports and NSE fact book which contains the nine Chemicals & Paints companies in Nigeria as at 2010. 

Correspondence:

+2348035881159, Muhammadshehutijjani@gmail.com, Tijjanims@gmail.com


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