n Journal of Emerging Trends in Economics and Management Sciences - Speed of adjustment towards the target capital structure by Nigerian listed firms

Volume 3, Issue 5
  • ISSN : 2141-7024
This is currently unavailable for purchase.



The ongoing adjustment and reform efforts of Nigeria, and the recent crisis in the nations' capital market, have brought to the fore the importance of finding optimal adjustment path that will maximize the intertemporal social welfare function of the country, subject to capital structure constraints. This paper examines speed of adjustment of Nigeria Listed firms to target capital structure. This study made use of panel data from secondary sources collated mainly from annual financial statements and reports of sampled companies quoted on the Nigerian Stock Exchange (NSE) over a study period of 10 years covering 2000-2009. Samples of 85 nonfinancial manufacturing listed companies were purposively selected for analysis. The findings of the study show that firms adjust toward target leverage at a moderate speed, with a half-life of 3.9 years for book leverage, even after controlling for the determinants of capital structure and firm fixed effects. However, if projects appear with much higher frequency, and if they need to be financed quickly, even this adjustment seems slow.

Loading full text...

Full text loading...


Article metrics loading...


This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error