The purpose of the research was to investigate to what extent the size of a firm in Nigeria oil and gas industry affects the magnitude of external borrowings. The study went further to examine the relationship between firm size and financial leverage in the same industry; as well as the causal relationship among the variables under study. Simple regression model was formulated to guide the analysis. The analysis of the time series data reveals that financial leverage is significantly but negatively affected by firm size in the industry. This implies that as firms increase in total assets, the firms tend to play down on sourcing for fund through external borrowing. The outcome is in line with some previous studies and in accordance with the theoretical framework of the study. There is no causality running from either Firm Size to Financial Leverage or otherwise, at 2 years lagged period; which implies that Financial Leverage does not granger cause Firm Size and vice versa. A negative relationship was revealed between firm size and financial leverage; though very insignificant; which implies that firm size and financial leverage change/increase in opposite direction in oil and gas industry. Therefore, firms at growth age, with a growing asset base, will need external borrowing more than a firm at mature or declining age with huge asset base and accumulated retained earnings.

Abstract:Examination of the effect of listing age on corporate financial leverage of oil and gas firms in Nigeria is the main objective of this study. The study also considers, for sake of robustness, the trend of movement of the variables, the relationships among the variables, as well as the causality of a variable by the other. This made the study a meta-analysis of the time series data. Simple regression was applied to estimate the effect of listing age on financial leverage of the selected firms. Correlation and Granger Causality Tests were applied to ascertain the relationships and causalities among the model variables. The outcome of the analysis is that firm's Listing Age has a significant but negative effect on Financial Leverage, which implies that, as an oil firm advances in age, the firms' need for external financing will tend to reduce. Causality test reveals that at a lagged period of one year, there is no causality running from financial leverage to firm age and vice versa. This implies that financial leverage is not caused by listing age of the oil and gas firm or otherwise. When the relationship between firm age and financial leverage was tested, the test reveals that financial leverage has an insignificant negative relationship with firm age in Nigeria Oil and Gas firms. The sustainability of theses outcomes over a long period of time was also tested using the Johansen Cointegration Test which indicates cointegrating equations which implies that short run effects and relationships are very sustainable, all things remaining the same. Therefore, firms are encouraged to borrow less as they advance in age. In conclusion, therefore, at maturity stage of the firm, external borrowing should be discouraged in preference to other sources of investible funds.

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