PANEL DATA ANALYSIS OF DEBT FINANCING AND PERFORMANCE IN NIGERIAN MANUFACTURING FIRMS

This study assessed debt financing and financial performance of quoted manufacturing firms in Nigeria. The objective of the study was to ascertain if there was significant relationship between debt financing and financial performance of quoted firms. The study adopted deductive approach and employed the ex post facto research design and relied on secondary data from the quoted firms while data were analyzed using panel data analysis, ordinary least square estimator, fixed effects and random effect models. The study found that found that 60 per cent variation on the return on equity of the manufacturing firms were traced to variation on the debt financing. Long term debt have negative and significant effect, short term debt have negative and no significant effect while total debt ratio have positive and significant effect on return on equity of the manufacturing firms. 49 per cent variation on the earnings per share of the selected manufacturing firms was traced to variation on the debt financing. Long term debt have negative and significant effect, short term debt have negative and no significant effect while long term debt ratio have negative and significant effect on earnings per share of the manufacturing firms. From the findings, the study concludes that debt financing have significant effect on financial performance of the manufacturing firms. The study recommends that Quoted firms in Nigeria should substitute all the proportion of long-term debt in the capital structure with short-term debt and that optimal capital structure is essential for the profitability of manufacturing companies in Nigeria. Management of corporates corporate firms Nigeria Exchange Group to incorporate borrowed funds in their capita mix to improve performance and recommended the need for managers to pay attention on other financing sources in their capital mix. The need to reduce information asymmetry and moral hazard between in corporate financing and financial institutions should also be aware of the importance of transparency measures, which can improve their relationship with financial institutions in the business environment. Leverage to be employed by corporate managers in a prudent manner that the cost of borrowing does not exceed the return for their corporates and Quoted firms should to form joint ventures and to partner with both domestic and foreign partners to access more assets particularly long-term assets with modern technology