Effects of Capital Structure on the Financial Performance of Listed Consumer Goods Firms in Nigeria (2011-2021)

The study investigated the effect of capital structure on the financial performance of listed consumer goods firms in Nigeria between 2011 and 2021. A sample of ten firms was purposively selected from the study’s population of twenty four consumer goods firms listed on the Nigerian Stock exchange. The study employed secondary source of data obtained from the financial statements of the selected firms and the data collected was analyzed using random effects model. Findings from the study showed that the coefficient of share capital is negative (−1.86262) and insignificant (p=0.7961>0.05) and the beta value of short-term debt is positive (5.08662) and insignificant (P=0.1596 >0.05). The coefficient of long-term debt is also positive (6.78568) and statistically significant (p=0.0298<0.05) and the beta value of retained earnings is positive (3.55649) and insignificant (p=0.2617>0.05) for the same firms in Nigeria. The study concluded that share capital has a negative and significant effect on the financial performance, while retained earnings, short-term debt and long-term debt have positive effects on the firms’ financial performance. The study recommended that the consumer goods firms in Nigeria should avoid financing their operations with share capital without taking remedial actions on it persistence negative effect on their performance and Nigerian governments should be formulating new industrial policies that will rebrand the local enterprises including consumer goods firms instead of insisting on their annual corporate tax increase.