• 0 Review(s)

Product Category: Projects

Product Code: 00000904

No of Pages: 78

No of Chapters: 5

File Format: Microsoft Word

Price :



The purpose of this study is to examine the evaluation of capital structure and dividend policy decision and firms performance on the Nigerian stock exchange. Strong statistical evidence based on the analyzed to confirm a strong statistical relationship between capital structure and earning per share in Nigeria stock exchange couldn’t be found. The main statistical tool employed in this work is Pearson’s Correlation Techniques and the result reveals that there is significant relationship between retained earnings of listed firms and firms performance on Nigeria stock exchange. The study concluded that gearing increase 




Title Page                                                                





        Table of Contents                


        Chapter One: Introduction                                     

1.1      Background to the Study                                        

1.2      Statement of Problem                                             

1.3      Research Questions                                                

1.4      Objective of the Study                                             

1.5      Statement of Hypothesis(es)                            

1.6      Significance of the Study                                        

1.7      Scope of the Study                                                  

1.8      Limitations of the Study                                        

1.9      Definitions of Terms     


Chapter Two: Review of Related Literature             

2.1      Introduction                                                            

2.2      Conceptual Explanations                                               

2.3      Theoretical Framework                                           

2.4      Recent Theories on Optimal Capital Structure        

2.5      Review of Empirical Studies                 


Chapter Three: Research Method and Design        

3.1      Introduction                                                            

3.2      Research Design                                                     

3.3      Description of Population of the Study                   

3.4      Sample Size                                                            

3.5      Sampling Technique                                                       

3.6      Sources of Data Collection                                      

3.7      Method of Data Presentation                                  

3.8      Method of Data Analysis      


Chapter Four: Data Presentation, Analysis and Interpretation                

4.1      Introduction                                                            

4.2      Presentation of Data                                               

4.3      Data Analysis                                                          

4.4      Hypothesis Testing                                                 


Chapter Five: Summary of Findings, Conclusion and Recommendations     

5.1      Introduction                                                          

5.2      Summary of Findings                                           

5.3      Conclusion                                                            

5.4      Recommendations                                                 









1.1      Background to the Study

The survival of the long run objective of any business organization depends to a large extent on the decision it takes toward its capital structure and dividend policies. The overall objective of any business organization is to maximize the shareholder wealth.

The firm has to invest in some of its profitable venture which promises the highest returns with the shareholders fund and other fixed interest debt finance.

The decision of the firm to employ debt finance came with certain element of risk toward the shareholders. The proportion of debt to owners equity employed will have some effect on their earnings either positively or negatively depending on the shareholder decision towards risk.

The impact of capital structure and dividend policy on corporate performance has been unsettled one. Some writers are of the opinion that the way and manner in which the operation of a firm is financed does not affect the value of the firm while some believe that the use of debt in the financing mix will magnify the value of the firm if the financial manager will be indifferent to the source of finance that appropriate capital structure is a critical decision for any business organization. The decision is important not only because of the need to maximize return to various organizational constituencies but also because of the impact such a decision has on the organization’s ability to survive in its competitive environment. The prevailing argument originally developed by Modigliani and Miller (1989) is that an optimal capital structure exist which balance the risk of bankruptcy with the tax saving of debt. It is important to note that dividend is not a contractual obligation of the firm to its shareholder or debt providers. The amount of the dividend, if any, is rested on management’s best options to use the income. The board of directors who are ultimately responsible for setting dividend policy can chose not to pay any dividend using the firm’s earnings to acquire additional asset instead.

Dividend policy is the principle use in determining what portion of earning should be paid out as divided during the period, the divided policy may be expressed in the follow objectives such as target payout ratio; a divided policy table give the tax earning on the firm available to it legal constraint and the need to satisfy the shareholders must be decided whether or not to pay divided. If yes, ‘what proportion of its total earning should be paid out and what form of divided payout will be in the best interest of the firm?

In every business, capital structure is of primary importance. It is to show how a company finances its operations through some combination of equity; debt etc. A firm’s capital structure is the composition of its liabilities, The capital structure indicate how the company finances its entire operations and expansion by utilizing different financial resources whether it is from equity capital, debt capital, or other forms of capital such as vendor financing,

Vendor financing is a process of selling goods or products before paying the bill to the vendor. It doesn’t cost anything to the company; instead it gives more return on investments. It should be noted that capital structure includes equity capital which is the money invested into a company in exchange for an ownership interest in that company. Usually, equity capital has two kinds, first is the contributed capital. This is the money which the shareholders invest in the business. Secondly, are the retained earnings which represent the profit or earning of the company that is being kept by the company to use as additional fund for growth, acquisitions and expansions?

Another form of capital in the business is the debt capital through long term debt and specific short term debt. This money which is a part of company’s capital structure is borrowed or lent from the other banks or financial institutions to finance the order requirement of the business.

Pandy (1989), entrepreneurs usually start their companies with other stockholders in the business in order to contribute to the increase of the business capital. In this connection, the management of the company is authorized to use the collected money capital to invest in the factories or plant and to purchase equipments and supplies. The stockholders use their money to purchase share stock in the company. In this way, each stockholder owns a share or percentage of the company through investing their money as part of the capital of the company.

Nevertheless, dividend policy refers to the company’s regulation and guidelines on dividend payments to the shareholders of the organization. Having a dividend policy is very essentials for both the company and the shareholders, it is easier to monitor and figure out the impact of the dividend policy in the entire operation of the business.

Therefore, dividends are payments made by the corporation to its shareholder when a company earns a profit or surplus and such money can be used as retained earnings.

Many corporations retain a portion of the shareholders profit and whatever money left will be paid to the share holders as dividends. Equally important, there are various kinds of dividend payouts. Firstly is the cash dividend, this is product of cash avail ability and cash planning. The cash account and the reserves account of a company will be reduced be when the cash dividend is paid. Second is the stock or scrip dividend it involves the payment of a dividend in the form of extra shares rather than cash as an alternative to pay out cash dividends during a year, a company may choose to pay a stock dividend. Thirdly, Scrip issue bonus issue this is the capitalization of the reserves of a company by the issue of additional shares to existing shareholders in proportion to their holding, usually at no cost.


1.2      Statement of Problem

The fundamental objective of the firm is to maximize shareholder wealth and the market value of the firm. For firm to achieve this, the firm capital structure need to be at its optimum level, hence capital structure have an impact on firm financial performance. The dividend policy decision adopted by a firm also have a significant impact on the firm value. Over the years for a firm to have an optimum capital structure and design a dividend policy decision that will maximize the firms value is a critical factor to be considered. Many corporate organizations fail to grow and survive due to poor capital structure and dividend decision policy adopted. The study is to carryout an investigation on the impact of capital structure and dividend policy decision on corporate performance in Nigeria and to design policy implications from the findings on the study. 


1.3      Research Questions

In order to achieve the objective of this study, the following questions require answers;

i.            Is retained earnings related to firm’s quoted on the Nigerian stock exchange performance?

ii.          To what extent does optimum capital structure contribute to firm’s market value?

iii.        How does dividend policy decision affects the performance of firms? 

iv.         How does the trend of finance mix of firms influence the performance of the firms?

1.4      Objective of the Study

The main objective of this study is to examine the impact of capital structure and dividend policy decision on corporate performance in Nigeria.

i.            To determine the relationship between firms listed on Nigeria Stock Exchange (NSE) retain earnings and performance of firms.

ii.          To examine the extent to which optimum capital structure do contribute to firms market value.

iii.        To find out if dividend policy decision affects the performance of firms in Nigeria.

iv.         To determine how the trend of finance mix influence the performance of firms in Nigeria.

1.5      Statement of Hypotheses

The following hypotheses are formulated and to carryout the investigation systematically.

Hypothesis One

HO:   There is no significant relationship between retained earnings of listed firms and firms performance.

HI:    There is significant relationship between retained earnings of listed firms and firms performance.

Hypothesis Two

HO:   There is no extent to which optimum capital structure does contribute to firms market value.

HI:    There is extent to which optimum capital structure do contribute to firms market value.

Hypothesis Three

HO:   Dividend policy does not affect the performance of firms in Nigeria.

HI:    Dividend policy affects the performance of firms in Nigeria

1.6      Significance of the Study

Despite the general recognition of the importance of financing mix and dividend policy decision, it is an irony of history to note that enough empirical test have not been carried out to prove or disprove either the capital structure or divided policy theories propounded many years ago. This is especially so in all developing countries like Nigeria where much work need to be done in this area. All over the world capital structure and dividend policy are areas where financial management has consistently failed. It is against this background that this study aims at testing the validity or otherwise of this conflicting theories.

It is therefore hoped that the result of this study will contribute significantly to the debate as to whether capital structure and divided policy decision have impact on corporate performance in Nigeria.


1.7      Scope of the Study

This study is to examine the effect of capital structure and dividend policy decision on corporate performance in Nigeria.

Geographical coverage: The majority of the companies in Nigeria are based in Lagos, the fourteen companies used in this study are all Lagos based.   

Time frame: The companies must be in Nigeria stock exchange and the result obtained cover a period of five years (2009 – 2013). In order to easy the problem of data collected, all the firms examined are quoted in Nigeria stock exchange. 

Sample: A sample size of 14 is used in this study.

1.8      Limitations of the Study

Some factors limit the extent and depth of this research work. These limitations include non-availability of adequate literature and the refusal of management to furnish some important documents/data for more detailed analysis on grounds of confidentiality.

Again, the availability of textbooks that deals on relevant areas of the study is another constraint. There were only few, textbooks to consult in the school library and most of them are obsolete. The researcher had to look outside the polytechnic library for relevant
materials such as journals write-up etc.

Since the research work was done during the normal course of study, it was not possible to undertake an elaborate study.

Finally, we must point out that our main instrument of data collection was through personal interview and no matter how it is constructed it is subjected to individual bias and subjected to judgment.

1.9      Definition of Terms

Capital: This can be defined as something owned which provides ongoing services. It also refers to as money, property and other valuables which collectively represent the wealth of an individual or business.

Capital Structure: This refers to the balance between the assets and liabilities of a company, the nature of its assets and the composition of its borrowings. Assets may be fixed or current while borrowing may be long term or short term.

Corporate Performance: This is the area of business intelligence involved with monitoring and managing an organization’s performance according to key performance indicators such as revenue, return on investment, overhead and operational costs.

Dividend: This is the sum of money paid regularly by a company to its shareholders out of its profits.

Dividend Po1icy: This is the regulations and guidelines that companies develop and implement as the means of arranging to make dividend payments to the shareholders.

Equity Capital: The part of the share capital of a company owned by ordinary shareholders.

Retained Earnings: This refers to the portion of net income, which is retained by the corporation rather than distributed to its owners as dividends. 

Buyers has the right to create dispute within seven (7) days of purchase for 100% refund request when you experience issue with the file received. 

Dispute can only be created when you receive a corrupt file, a wrong file or irregularities in the table of contents and content of the file you received. shall either provide the appropriate file within 48hrs or send refund excluding your bank transaction charges. Term and Conditions are applied.

Buyers are expected to confirm that the material you are paying for is available on our website and you have selected the right material, you have also gone through the preliminary pages and it interests you before payment. DO NOT MAKE BANK PAYMENT IF YOUR TOPIC IS NOT ON THE WEBSITE.

In case of payment for a material not available on, the management of has the right to keep your money until you send a topic that is available on our website within 48 hours.

You cannot change topic after receiving material of the topic you ordered and paid for.

Ratings & Reviews


No Review Found.

To Review

To Comment