THE EFFECT OF CAPITAL STRUCTURE ON AGRICULTURAL SECTOR PERFORMANCE IN NIGERIA (2007 – 2021)
Prof Osuka, Boniface O. Department Of Banking And Finance, Imo State University, Owerri, Imo State Prof Ojiegbe, Josephine N. Department Of Banking And Finance, Imo State University, Owerri, Imo State Joeojiegbe@hotmail.com Obizue Emmanuel C. Dep
Volume 3, Issue 2, September 2023
The practice of Agriculture involves the cultivation of crops and tending of livestock for the purpose of production of food and fiber for humans, and raw materials for agro-allied industries for the overall growth and development of Nigeria. The main objective of this study is to investigate the effect of capital structure on the performance of the agricultural sector in Nigeria and this was carried out for the period between 2007 and 2021. Ex-post facto research design was adopted in the study and the panel data technique was used for the study analysis. Seven agricultural firms were selected for this study and secondary data were sourced from their various published accounts. The study used Return on Equity (ROE) as the performance indicator and the capital structure indices were the ratios of Equity to total assets (EQTA), Short-term debt to total assets (STDTA) and Long-term debt to total assets (LTDTA).The result of the study indicated a mixed relationship among the variables and the researcher recognized that although there is mixed relationship among the variables, there is a positive and significant relationship between capital structure and the output of agricultural sector in Nigeria hence it is concluded that capital structure is a good predictor of agricultural sector performance in Nigeria. The recommendations is this study are; the management of quoted agricultural firms should ensure they attain an optimal capital structure in order to increase the agricultural output and investment and this can be achieved by maintaining precaution against the apparent benefits of greater leverage simply as a device for controlling managerial opportunistic behavior.