CAPITAL STRUCTURE DECISIONS AND FINANCIAL PERFORMANCE DYNAMICS OF LISTED OIL AND GAS COMPANIES IN NIGERIA: A PANEL DATA ANALYSIS (2014–2023)

Abstract

This research evaluates how capital structure impacts the financial outcomes of Nigeria’s listed oil and gas firms between 2014 and 2023. Combining the analysis of panel data and the normal regression of ordinary least squares (OLS) regression reveals a substantial decrease in both EPS and ROA as a result of an increase in the equity ratio (DER). In contrast, the firm size demonstrates a positive and significant impact on financial performance, emphasizing the advantages of scale and enhanced access to resources. Unfortunately, there is no significant impact of the debt to asset ratio on the performance indicators. The outcomes align with both the “pecking order and trade-off theories”, emphasizing the importance of a well-balanced funding approach. This research suggests that companies in the oil and gas industry should carefully manage their capital structure, avoiding excessive borrowing and taking advantage of the advantages that come with their size. Policymakers are also advised to foster a stable financial environment to facilitate the sector's expansion.