Exploring the Effect of Capital Structure on Firm Value in Information and Communication Technology Listed on the Nigeria Exchange Group (Ngx)

This study examined the effect of total debt to assets equity, total debt to assets, long-term debt to assets, and short-term debt to assets on the valuation of publicly listed Information and Communication Technology (ICT) firms in Nigeria from 2014 to 2023. Size was utilized as a moderating variable. The study population comprises seven (7) information and communication technology firms. The sample selection was conducted utilizing the census sampling method. As a result, we collected all seven samples. Secondary data was obtained from the annual reports of the selected companies, and panel data analysis was conducted using fixed effects, random effects, and pooled ordinary least squares methods. Hausman’s Chi-square statistics were employed to analyze the data. The research analyzed three categories of debt: total debt, long-term debt, and short-term debt. Each of the three factors demonstrated a positive impact on the company’s value, with statistical values of t = 2.6102 (P < 0.05), t = 2.7710 (P < 0.05), and t = 2.9254 (P < 0.05). The debt-to-equity ratio negatively impacted Tobin’s Q (t = -2.1227, P < 0.05). The study recommended that ICT firm management reduce the debt-to-equity ratio, achievable through a decrease in debt and an increase in equity. ICT companies listed on the stock market should aim to replace a minimum of 75% of their debt with equity by utilizing bonus issues, rights issues, and increasing retained earnings to enhance the company’s value.