Debt Financing and Firm Value of Listed Consumer Goods Firms in Nigeria

Raphael S. Etim, Mary V. Asuquo & Utibe Etim

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Abstract

This study was conducted to ascertain the influence of debt financing on the firm value of listed consumer goods firms in Nigeria. Ex-post facto research design was adopted in the study. The population of this study consisted of twenty-one (21) consumer goods firms listed on the floor of st Nigerian Stock Exchange as at 31 December 2019, while the sample size of the study was sixteen (16) listed consumer goods firms in Nigeria. The study covered the financial period of 2013-2019 year of assessment. Purposive sampling technique was adopted in the study. Data were collected from the financial statements of the sample firms in Nigeria. The data collected were analysed using descriptive statistic and multiple linear regression analysis with the help of E-view version 10. Findings from the study showed that Debt Ratio and Long-Term Debt have positive and significant influence on the firm value of listed consumer goods firms in Nigeria. In conclusion, the paper posited that debt financing is a good source of financing for firms in the consumer good industry. However, in view of the opposing implications of debt financing, that is, the cheap option and the risk of default, the paper recommended that listed consumer goods firms in Nigeria should continue to embrace the use of debt in their capital structure as a financial option but with caution so that the investment of equity owners will not be drowned in the ocean of debt servicing and possible bankruptcy menace due to accumulative interest expense and default in repayment of capital

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