CAPITAL STRUCTURE AND THE FINANCIAL PERFORMANCE OF OIL AND GAS COMPANIES IN NIGERIA

Abstract

This research work examined the relationship between Capital Structure and Financial Performance in Oil and Gas Companies in Nigeria for a period of 5 years from (2013-2017). Secondary data obtained from the Nigerian Stock Exchange Commission, was used in this study. Ordinary least square multiple linear regression was the statistical tool used for the analysis with the aid of E-view 10. In carrying out the analysis, the stationary test shows that the variables are stationary at first difference. The co—integration test proved the presence of a long run relationship. The granger causality test proved no causality between the variables and the results of the regression analysis carried out revealed both positive and negative relationships that exist between the variables. It was found that Debt to equity ratio and debt to Total Assets ratio have significant and positive impact on Return on Assets. The study therefore concluded that optimal capital structure has significant and positive relationship with the financial performance of oil and Gas companies in Nigeria. It was recommended that optimal capital structure is a pre-condition for improved financial performance.