FIRM CHARACTERISTICS AND FINANCING DECISIONS: EVIDENCE FROM LISTED NIGERIAN NON-FINANCIAL FIRMS

Abstract

his study examined the determinants of financing choices of nonfinancial firms in Nigeria. The variables examined are firm size, firm profitability, firm liquidity, ownership concentration, and firm age. The data used for this study were obtained from the secondary source of published annual financial statements of firms in the sectors. The study employed ordinary least square (OLS) regression, and the adopted model was estimated using the STATA 14 statistical package. The major findings of the study are: firm size and ownership concentration positively and significantly impact firm financing decision, firm profitability and liquidity negatively and significantly impact financing decision, and firm age negatively but insignificantly affects firm financing decision. The study recommends that: appropriate trade-off should always be adopted between internal and external financing; firm ownership structure should be carefully watched to maintain its strategic advantage, firm liquidity should be regularly evaluated not to hamper profitability, and the advantages of firm age should be carefully mainstreamed upon.