This study analyzed the determinants of leverage of non-financial firms in Nigeria, applying the Two-stage System Generalized Method of Moment (SYS-GMM) on 73 listed firms over the period 2010- 2020. Specifically, we considered how the four main determinants that have received serious attention in the literature (asset tangibility, growth, profitability and size) and two other determinants (age & liquidity) that have not been thoroughly investigated in the literature affect leverage. Results show that leverage is positively related to asset tangibility, growth and age and negatively related to profitability, size and liquidity. Thus, we conclude that high-growth and older firms with a high proportion of tangible assets tend to rely more on debt than larger firms with the capacity to generate internal funds or retained earnings. Government should provide the needed enabling environment that will enhance the ease of doing business so that firms can generate adequate profitability that will dissuade the use of debt. In this regard, monetary policies aimed at reducing the inflation rate, interest rate and appreciation of the real exchange rate are capable of enhancing the capacity and ability of Nigerian firms to generate higher profits.

This study was carried out to determine the effect of financial leverage on the financial performance, using secondary data obtained from the annual reports of 7 quoted Oil and Gas firms in Nigeria, and the Nigerian stock exchange (NSE) daily official lists over the period 2005- 2016. Descriptive statistics such as mean, median, minimum, maximum, standard deviation, coefficient of variation, skewness and kurtosis were used in data presentation, while random effects panel estimator is applied in determining the effect of financial leverage variables as short-term debt ratio (STDR), long-term debt ratio (LTDR) and total-debt equity ratio (TDER) on the financial performance measured by the return on equity (ROE). The regression results from the random effects model (REM), the best panel estimator in this study as revealed by the F-test and the Hausman test for best model selection, indicate that STDR and LTDR have no significant effect on the financial performance, and TDER has a negative significant effect on the financial performance denoted by ROE. The study concludes that higher financial leverage in the capital structure of quoted Oil & Gas firms in Nigeria deteriorates shareholders wealth measured by ROE. The study recommends that firms in the Oil & Gas sector should substitute at least 90 per cent of debt in the capital structure with equity, through bonus issue, right issue and higher proportion of retained earnings in the capital structure. Abubakar, A. | Department of Business Management, Federal University Dutsin-Ma, Katsina State, Nigeria

This study assessed the effect of financial leverage on the financial performance, using data from the annual reports of 7 quoted oil and gas firms in Nigeria, as well as from the Nigerian Stock Exchange (NSE) daily official lists over the period 2005- 2018. Descriptive statistics were used in data presentation, while random effects panel estimator was applied in determining the effect of financial leverage variables as short-term debt ratio (STDR), long-term debt ratio (LTDR) and total-debt equity ratio (TDER) on the financial performance, measured by the return on equity (ROE). The regression results from the random effects model (REM) indicate that STDR and LTDR have no significant effect on the financial performance, and TDER has a negative but significant effect on the financial performance denoted by ROE. The study concludes that higher financial leverage of quoted oil and gas companies in Nigeria attenuates shareholders’ wealth. The investment implication of this conclusion is that oil and gas companies should look more carefully at the utility maximization value of debt vis-à-vis equity in their capital structure.