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Vol. 6 No. 2 (2024): Research Journal of Financial Sustainability Reporting (RJFSR)

Effect of Financial Structure on Earnings of Shareholders of Manufacturing Firms in Nigeria

Submitted
October 14, 2024
Published
2024-10-14

Abstract

Research Objective: The study investigated the impact of financial structure on the earnings of shareholders in Nigerian manufacturing firms, specifically within five selected food and beverage companies listed on the Nigeria Stock Exchange from 2013 to 2022. It focused on examining the effects of Equity Capital, Debt Capital, and Working Capital on Earnings per Share (EPS) of shareholders.

Methodology: The research employed an ex-post facto design, utilising secondary data from the annual reports and financial statements of the selected companies. The data were analysed using a multiple regression model, and three hypotheses were tested to understand the relationships between the financial structure components and shareholder earnings.

Findings: The analysis revealed that equity capital, debt capital, and working capital do not have a significant effect on the earnings per share of shareholders in the manufacturing firms studied. This was supported by t-statistics of 0.745866, -0.742892, and -1.373131, with corresponding probabilities of 0.4601, 0.4620, and 0.17747, respectively. These findings suggest that the firms have not effectively or prudently utilised their financial resources to significantly influence shareholder earnings.

Conclusion: The study concluded that the current financial structure—comprising equity capital, debt capital, and working capital—does not positively or significantly impact shareholder earnings in Nigerian manufacturing firms. This reflects inefficiencies in fund management that hinder the realisation of potential benefits for shareholders.

Recommendations: The researcher recommended that manufacturing firms should stabilise and enhance their equity mix, improve their awareness and application of government and company credit policies, and prioritise the optimal management of working capital. Constant monitoring of these elements is essential to achieve a significant and positive impact on earnings per share.

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