Thin capitalization and the profitability of consumer goods companies in Nigeria

Abstract

The study examined how thin capitalization affected the pro􀅫itability of consumer goods companies in Nigeria. The selected companies' annual reports and 􀅫inancial statements from 2007 to 2022 provided the research's data. A sample of 􀅫ifteen (15) out of the twenty companies that comprised the population was employed. Regression and correlation analyses were used to analyze the data using descriptive statistics. According to the study, the pro􀅫itability of consumer goods companies is negatively impacted by thin capitalization. Board size has a negligible and adverse impact on the tested companies' pro􀅫itability. The companies' ages positively and signi􀅫icantly impacted the pro􀅫itability of the sampled companies. In order to increase the pro􀅫itability of the tested Nigerian consumer goods companies, the study recommended that consumer goods companies limit the size of board members and ensure that a minimal amount of thin capitalization is maintained.