FINANCIAL STRUCTURE AND MARKET VALUE OF INSURANCE FIRMS IN

NIGERIA

BY

UDOM, Gabriel Gabriel

(AK19/MGT/ACC/069)

A RESEARCH PROJECT SUBMITTED TO

DEPARTMENT OF ACCOUNTING
FACULTY OF MANAGEMENT SCIENCES
AKWA IBOM STATE UNIVERSITY
OBIO AKPA CAMPUS
 FEBUARY, 2024

FINANCIALSTRUCTURE AND MARKET VALUE OF INSURANCE FIRMS IN

NIGERIA

BY

UDOM Gabriel Gabriel

(AK19/MGT/ACC/069)
 A RESEARCH PROJECT SUBMITTED TO

DEPARTMENT OF ACCOUNTING
FACULTY OF MANAGEMENT SCIENCES
AKWA IBOM STATE UNIVERSITY

IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD

OF THE DEGREE OF BACHELOR OF SCIENCE (B.Sc) IN ACCOUNTING,
DEPARTMENT OF ACCOUNTING, FACULTY OF MANAGEMENT SCIENCES,
AKWA IBOM STATE UNIVERSITY
 DECLARATION

I, UDOM Gabriel Gabriel with registration number AK19/MGT/ACC/069 hereby declare that

this research project titled

“FINANCIALSTRUCTUREANDMARKETVALUEOFINSURANCEFIRMSINNIGERIA

" is a product of my research effort under the supervision of Dr.Mrs Dorathy Akpan and has not

been presented elsewhere for the award of a degree or certificate. All sources have been duly

acknowledged.

UDOM Gabriel Gabriel ……………………… ………………….

(AK19/MGT/ACC/069) Signature Date
 CERTIFICATION

This is to certify that this research project titled

“FINANCIALSTRUCTUREANDMARKETVALUEOFINSURANCEFIRMSINNIGERIA

" carried out by “UDOM Gabriel Gabriel” with registration number: AK19/MGT/ACC/069

has been found worthy for the award of the Degree of Bachelor of Science in Accounting.
Dr.Mrs Dorathy Akpan …………………. ………………
Project Supervisor Signature Date

Dr.(Mrs) Eno Gregory Ukpong …………………. ………………

Head of Department Signature Date

Prof. Ibok N. Ibok…………………. ………………

Dean of Faculty Signature Date

_______________________ …………………..…………..…
External Examiner Signature Date
 DEDICATION

This research work is dedicated to God Almighty

 ACKNOWLEDGMENTS

I extend my deepest appreciation to the guiding light of my life, my Heavenly Father, for

His abundant grace and unwavering support that have led me to this momentous achievement. I

am immensely grateful to my dedicated supervisor, Dr.Mrs Dorathy Akpan, whose invaluable

guidance and unwavering encouragement have shaped this research endeavor.

My heartfelt thanks also go to the nurturing presence of Dr. (Mrs) Eno Gregory Ukpong,

my esteemed Head of Department, for her unwavering support and maternal care throughout this

journey.

I extend my sincere appreciation to my dynamic lecturers, Prof. Joseph Udoayang, Dr.

Usen Paul, Dr. Uwakmfonabasi Simeon, Dr. Sunday Okpo,Dr. Emmanuel Emenyi, Dr. Uwem

Uwah, Dr. (Mrs.) Adebimpe Umoren, Mr. Udeme Eshiet, Mr. Essien Ukpe, Mr. Ndifreke Isaac,

Mrs. Esse Nsentip, Mr. Patrick Akninniyi, and Mrs. Affiong Otung. I would also like to

acknowledge the non-teaching staff members in the department – Mrs. Matilda Effiong, Miss

Mercy Esimka, and Mr. Mfon Robson, whose relentless support has been instrumental to my

academic pursuit.

I express my heartfelt appreciation to my parents Mr and Mrs Gabriel Etim UDOM

whose unwavering love and support continue to inspire me. To my dear sister – Laurel Gabriel

Etim, and my younger siblings,and friends your unwavering love and care have been my pillar

of strength throughout this journey.

 To each and every one mentioned, and those unmentioned, your impact has been

immeasurable, and I am eternally grateful. Thank you, and may the universe lavish its blessings

upon you. Amen.

TABLE OF CONTENTS

Title page ii
Declaration iii
Certification iv
Dedication v
Acknowledgements vi
Table of contents vii
Abstract x
CHAPTER ONE: INTRODUCTION
1.1 Background to the study 1
1.2 Statement of the problem 2
1.3 Objectives of the study 4
1.4 Research questions 4
1.5 Research hypotheses 5
1.6 Scope of the study 5
1.7 Significance of the study 5
1.8 Organization of the study 6
1.9 Operational definition of terms peculiar to the study 7
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Conceptual framework 9
2.1.1 Corporate monitoring mechanisms 9
2.1.2 Audit committee size 10
2.1.3 Board independence 11
2.1.4 CEO duality 12
2.1.5 Tax sheltering strategies 13
2.1.6 Effective tax rate 15
2.1.7 Corporate monitoring mechanisms and effective tax rate 16
2.2 Theoretical framework 17
2.2.1 Resource dependence theory 17
2.2.2 Institutional theory 18
2.3 Empirical review 20
2.4 Summary of empirical review and gap in literature 29
CHAPTER THREE: METHODOLOGY

3.1 Research design 34

3.2 Population of the study 34
3.3 Sample size and sample size determination 34
3.4 Sampling technique 35
3.5 Sources of data and method of data collection 35
3.6 Method of data analysis 35
3.7 Model specification and operationalization of variables 36
3.8 Limitations of the study 37
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS

4.1 Data presentation 38

4.2 Data analysis 38
4.2.1 Descriptive statistics 38
4.2.2 Model evaluation 40
4.2.2.1 Normality test 40
4.2.2.2 Multicollinearity test 40
4.2.2.3 Heteroscedasticity test 41
4.3 Test of hypotheses 41
4.3.1 Hypothesis one 43
4.3.2 Hypothesis two 43
4.3.3 Hypothesis three 44
4.4 Discussion of findings 44
4.4.1 Audit committee size and effective tax rate 44
4.4.1 Board independence and effective tax rate 45
4.4.1 CEO duality and effective tax rate 46

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of findings 47

5.2 Conclusion 47
5.3 Recommendations 48
5.4 Suggestions for further studies 48
5.5 Contribution to knowledge 48
References 49
Appendices 54
 ABSTRACT
The adoption of tax sheltering strategies by non-financial firms in Nigeria can be attributed to
several conceptual causes. Based on this, this study examined the relationship between corporate
monitoring mechanisms and tax sheltering strategies of listed non-financial firms in Nigeria.
However, the specific objectives were to ascertain the relationship between audit committee size
and effective tax rate of listed non-financial firms in Nigeria, to establish the relationship
between board independence and effective tax rate of listed non-financial firms in Nigeria and to
investigate the relationship between CEO duality and effective tax rate of listed non-financial
firms in Nigeria.The study adopted an ex-post facto research design and utilized a panel data of
two hundred and forty (240) pooled observations gathered from twenty (24) listed non-financial
firms in Nigeria over ten (10) years period (2013-2022). The study also employed descriptive
statistics tools and panel multiple regression technique to analyze the data via E-views 10.0
statistical package. The study findings revealed that audit committee size has a significant
negative relationship (Coeff. = -0.374976{0.0439}) with effective tax rate of listed non-financial
firms in Nigeria. It also revealed that Board independence has a significant negative relationship
(Coeff. = -0.284378{0.0016}) with effective tax rate of listed non-financial firms in Nigeria
while CEO duality has an insignificant positive relationship (Coeff. = 0.920980{0.2153}) with
effective tax rate of listed non-financial firms in Nigeria.The Prob (F-statistics) of 0.000510
suggests that audit committee size (AUDCSz), board independence (BODI) and CEO duality
(CEOD) of listed non-financial firms in Nigeria have a combined significant effect on effective
tax rate (ETR) at 5% significance level. It was however concluded that corporate monitoring
mechanisms play a crucial role in shaping tax sheltering strategies and other tax related activities
among listed non-financial firms in Nigeria. The recommendations made included thatnon-
financial firms in Nigeria should ensure they have robust and adequately sized audit committees
as this will provide effective oversight of financial and tax-related activities.
 CHAPTER ONE

INTRODUCTION

1.1 Background to the study

The exploration of a firm's financing decisions and their impact on market value has been

a central focus in corporate finance since the seminal work of Modigliani and Miller (1958). This

enduring interest has spurred decades of research, reflecting the dynamic interplay between a

company's financial structure and its market value. Notably, in the Nigerian context, corporate

distress often arises from inadequate financial structures and inappropriate financing mixes

among local firms (Salawu, 2022). As companies grapple with myriad options for their financial

structures, including retained earnings, equity issues, liquid assets, or debt (Collins, Filibus, &

Clement, 2012), the strategic financial decisions they make become pivotal in achieving their

goals (Al-Slehat, Zaher& Fattah, 2020).

According to Al-Slehat, Zaher& Fattah (2020), these issues include how a company

should raise and manage its capital, what investments it should make, how much of its profits

should be paid out as dividends to shareholders, and whether it makes sense to merge with or

acquire another company. This issue has led to a number of important discussions about the

impact of a firm's financial structure decision on its market value, both theoretically and

empirically. A number of questions, including what financing combination appears to maximize

a company's market value, what part debt capital plays in the capital structure, and what

variables affect a company's capital structure decision; are raised (Mehmood, Hunjra&Chani,

2019).

Market value, according to Fasua (2021), is a company's value as determined by the stock

market. Increasing owner or shareholder prosperity through higher company value is the primary
objective of public companies (Salvatore, 2021). The importance of a company's value stems

from the fact that high company value is positively correlated with high shareholder prosperity

(Brigham &Gapenski, 2006). The stock price of a company increases in proportion to its value.

Owners of businesses want their companies to have high values because these values translate

into high levels of prosperity for shareholders. The market price per share, which reflects

decisions made about investments, financing, and asset management, has implications for both

the company and the shareholders (Saleh, Priyawan&Ratnawati, 2015).

In this research, the effect of asset structure, capital structure and debt structure on market

price per share is the main focus. Asset structure is the sum of all assets owned by a corporation

in running its business, which includes both current and fixed assets; a company's capital

structure is the combination of debt and equity it uses to fund its operations and investments and

debt structure is the decision of using either long-term debt or short-term debt. The study of

financial structure is underpinned by several theoretical frameworks amongst which trade-off

theory and signalling theory deemed suitable for this study. The trade-off theory proposes that

there is an optimal debt ratio, which is the ratio in which tax advantages equal the bankruptcy

and agency costs associated with debt while the signalling theory explains how a company can

communicate with the financial market through its financial structure decisions.

The connection between financial structure and market value is debatable. In my opinion,

a well-balanced financial structure, with an optimal mix of equity and debt, can enhance market

confidence and valuation. For instance, excessive debt may raise concerns about solvency and

increase financial risk, potentially lowering market value. Conversely, too much equity might

dilute earnings per share and reduce returns for shareholders. Finding the right balance is crucial

for maximizing market value. Additionally, factors such as interest rates, industry conditions,
and market sentiment also influence how financial structures affect market value.The literature

section of this work has gone over a lot of ground. Akin (2004), on the other hand, finds a

significant relationship between financial structure and firm value. According to the study's

findings, debt reduces average capital cost and increases firm value. In contrast, Ozaltin (2006)

discovered no significant relationship between firm capital structures and market values in his

study. Furthermore, Yucel (2001) claimed that financial structure has no effect on stock price,

but profit per stock and dividend distribution policies in organizations have a significant impact

on stock prices. In Duzer’s study (2008), it was found that firm value has a significant

relationship between the liquidity condition of a firm and its financial structure.

1.2 Statement of the problem

Financial structure decisions have a deep influence in the field of financial management,

serving as essential factors in the strategy toolkit of finance manager. These decisions have a

significant impact on a company's capital structure and overall success, making them critical

concerns for business leaders. The perpetual quest of an ideal financial mix adds a fascinating

element to managerial difficulties, which are characterized by subtle intricacies and potentially

far-reaching effects. A blunder in this pursuit exposes the organization not just to unexpected and

unpleasant outcomes, but also to the genuine prospect of a major loss in market value.

Adding to the complication, the large corpus of empirical research on the relationship

between financial structures and market value generates contradictory conclusions. Notably,

Ankomah et al. (2023), Pham (2020), Ali and Faisal (2020), and Bhattarai (2020) focused on

capital structure (debt and equity) and financial performance but ignored market value issues.

Similarly, studies conducted in Nigeria, such as those by Nwafor, Yusuf, and Shuaibu (2022),
Ayange et al. (2021), Ganiyu et al. (2019), and Usman (2019), had delved into the financial

performance and profitability of various sectors, excluding insurance firms and ignoring the

critical aspect of market value. As a result of these gaps, this research examines the effect of

financial structures on market value of listed insurance firms in Nigeria.

1.3 Objectives of the study

The major objective of this study was to determine the effect of financial structures on

market value of insurance firms in Nigeria. However, the specific objectives were to:

1. To examine the effect of asset structure on market price per shareof insurance firms in

Nigeria.

2. To determine the effect of capital structure on market price per share of insurance firms

in Nigeria.

3. To ascertain the effect of debt structure on market price per share of insurance firms in

Nigeria.

1.4 Research questions

The research questions for this study were:

1. What effect does asset structure have on the market price per share of insurance firms in

Nigeria?

2. To what extent does capital structure affect the market price per share of insurance firms

in Nigeria?
 3. What magnitude of effect does debt structure have on the market price per share of

insurance firms in Nigeria?

1.5 Research hypotheses

The following hypotheses were formulated for this study;

Ho1: Asset structure has no significant effect on the market price per share of insurance firms

in Nigeria

Ho2: Capital structure has no significant effect on themarket price per share of insurance firms

in Nigeria

Ho3: Debt structure has no significant effect on the market price per share of insurance firms in

Nigeria

1.6 Scope of the study

Content scope

This study examined the effect of financial structures on the market value of listed insurance

firms in Nigeria. The independent variable being financial structure was proxied by assets

structure, capital structure and debt structure while the dependent variable being market value

was proxied by market price per share.

Geographical scope

This research looked at all insurance companies listed on the Nigerian Exchange Group (NGX)

website between 2013-2022 (10 years).

Unit scope

Nineteen (19) insurance companies.

1.7 Significance of the study

Insurance Firms: Insurance companies in Nigeria are the primary subjects of the study.

Understanding how their financial structure impacts market value is critical for making informed

financial decisions. This research could help insurance firms optimize their financial structure to

maximize market value, which is of paramount importance for both shareholders and

management.

Regulatory Authorities: Regulatory bodies in the insurance industry, such as the National

Insurance Commission (NAICOM) in Nigeria, could benefit from the findings of this study. It

could inform policy decisions and regulatory frameworks related to capital requirements,

solvency ratios, and financial risk management.

Investors and Shareholders: Investors, including individual and institutional shareholders, need

to assess the financial health and market value of insurance firms to make investment decisions.

This research could provide investors with valuable insights into how financial structure affects

the attractiveness of insurance firms as investments.

Financial Analysts and Advisers: Financial analysts, consultants, and advisers could use the

findings to offer better guidance to their clients, whether they are insurance companies, investors,

or regulatory authorities. A deeper understanding of the link between financial structure and

market value is essential for providing informed recommendations.

Academics and Researchers: Academics and researchers in the fields of finance, insurance, and

economics could utilize this study as a basis for further research. It could contribute to the

academic literature and provide a framework for exploring similar topics in different contexts.

1.8 Organization of the study

This research work comprised of five chapters. The first chapter was the introduction of

the study which includes background of the study, statement of the problem, objectives of the

study, research questions, research hypotheses, scope of the study and definition of terms. The

second chapter showed review of related literature of the study which consisted of; conceptual

framework, theoretical framework, empirical framework, and summary of literature review and

research gap. Chapter three captured the research methodology used in making findings which

includes research design, population of the study and the method of population determination,

sample size and sample size determination, sample technique, sources of data and method of data

collection, method of data analysis, and limitations of the study. Chapter four showed the data

presentation, analysis and discussion of the findings which included data presentation, data

analysis, test of hypothesis, discussion of findings and chapter five provided the summary of the

findings, conclusion, recommendations, contribution to knowledge and suggestions for further

research.

1.9 Definition of operational terms

The following terms are defined as used in this research:

Asset structure: Asset structure refers to the composition and distribution of a company's assets,

including tangible and intangible assets, liquid and non-liquid such as cash, inventory, property,

and equipment, etc.

Capital structure: Capital structure refers to the mix of a company's financing sources,

including debt and equity, used to fund its operations and investments.

Debt structure: Debt structure refers to components of a company’s debt; whether long term or

short term, etc.

Financial structure: Financial structure refers to the composition of a company's capital,

including assets, debt and equity, used to fund its operations and investments.

Market price per share (MPS): The Market Price Per Share (MPS), also known simply as the

market price, refers to the current price at which a company's shares are traded on the open

market. It is the price at which buyers and sellers agree to transact in the stock market.

Market value: The market value of a firm, often referred to as its market capitalization, is the

total value of the firm's outstanding shares of stock in the financial markets, calculated by

multiplying the current market price per share by the number of shares outstanding.

1.10 Limitations of the study

The study had the following limitations: Annual reports and financial statements for estimated

sample sizes included only insurance firms listed on the Nigerian Exchange Group Market

whose annual reports were statutorily published and made available to the general public.

Companies that were not listed on the Exchange Markets were also excluded. Furthermore,
because this study was sector specific, the findings could not be generalized to other sectors such

as oil and gas or the industrial goods sector.

 CHAPTER TWO

REVIEW OF RELATED LITERATURE

In this section, a review of extant literature on the subject matter was carried out covering

conceptual issues, theoretical review, and review of empirical studies.

2.1 Conceptual framework

Independent variable Dependent variable

(Financial structure) (Market value)

Asset structure
Market price per
share (MPS)
Capital structure

Debt structure

Fig 1: Conceptual framework of variables

Source: Researcher’s estimate (2024)
2.1.1 Financial structure
A firm's financial structure refers to how it finances its assets using all of its available

resources (Mwangi, 2023). According to Saad (2010), financial structure refers to how a

company finances its assets through a combination of debt, equity, and hybrid securities. A firm

can seek cash to finance its assets by borrowing from investors or financial institutions and

offering them a fixed claim (interest payments) on the income generated by the assets

(Damodaran, 2015). All assets, liabilities, and equity are included in the financial framework.

Liabilities encompass both short-term and long-term liabilities, whereas assets comprise both

liquid and non-liquid assets (Barakat, 2020). In other words, funds sources obtained by the

company to finance its investments, whether short-term or long-term (Barakat, 2020).

According to Palepu (2005) and Sadiq et al. (2021), it is critical to distinguish between

the concepts of financial structure and capital structure. Long-term (long-term liabilities +

equity) funding sources are referred to as capital structure, whereas financial structure (funding

structure) contains assets, short- and long-term obligations + equity(Palepu, 2005). In essence,

firms finance only a portion of their assets with equity capital (ordinary, preference, and retained

earnings), while the remainder is financed with other resources such as long-term financial debt

or liabilities (such as bonds, bank loans, and other loans, other short-term liabilities such as trade

payables, fixed assets and current assets as trade receivables, cash itself, and other liquid assets

(Moyer, McGiugan&Kretlow, 1999; Sadiq et al., 2021).

Titman, Keown and Martin (2021) in their work also holds financial structure is capital

structure plus a firm’s non-interest-bearing liabilities like accounts payables and accruals, which

agrees with the definition of financial structure that it comprises of both liquid assets, short term

and long-term debts. The ability of the firm to carry out their stakeholders’ need is closely

related to the financial structure. It is not normally easy to determine. The importance of
financial structure of a firm lies in the power inherent in it. It affects real decisions to a company

on production, employment and investment (Haris&Raviv, 1991; Duong et al., 2020). This is

supported by Bolak(1998) who holds that financial structure decisions in firms are made in order

to determine the resources and periods of the required funds to obtain the sum of assets and their

components which are settled by the investment decisions.

The decision-making process concerning financial structure is intricate and influenced by

various factors. Ongore (2023) emphasizes the direct impact of ownership structure on a firm's

financial composition. Additionally, considerations such as cost, risk, flexibility, liquidity, size,

management share, and timing, as noted by Albez (2023), further contribute to the complexity of

this decision. Altan and Arkan (2011) established a significant relationship between financial

structure and firm value, indicating that the inclusion of debts can lead to a decline in average

capital cost and an increase in overall firm value. However, Ozaltin's research (2006) fails to find

a significant link between capital structures and market values in firms listed on ISE. Yucel

(2001) suggests that while financial structure may not directly impact stock prices, factors like

profit per stock and dividend distribution policies play a crucial role. Duzer's study (2008) adds

depth by revealing a significant relationship between firm value, liquidity condition, and

financial structure. This intricate interplay underscores the multifaceted nature of financial

decision-making and its profound implications for a firm's performance and market value.

2.1.2 Asset structure

In the realm of accounting, Al Ani (2022) refers to the International Accounting

Standards Board's (IASB) definition of assets as the "probable future economic benefits obtained

or controlled by a particular entity as a result of past transactions or events. Echoing this

perspective, Setiadharma and Machali (2017) characterized assets as the properties owned by a

firm within a specific period. Assets, as elucidated by Ukhriyawati, Ratnawati and Riyadi

(2017), embody the wealth or economic resources possessed by a company, anticipating future

benefits. These assets encompass fixed assets, intangible assets, and current assets, forming a

dynamic spectrum that underlines the intrinsic value and potential growth within a company's

financial landscape.

Depending on the objective of the study, different scholars have characterized asset

structure using various aspects. According to ZhengSheng, Nuo and Zhi (2013), asset structure is

the diversified arrangement of resources. They divided it into three parts: turnover assets,

producing assets, and wasting assets. Asset structure, according to Koralun-Berenicka (2013), is

a combination of several asset components such as financial fixed assets, tangible fixed assets,

current assets, current investments, and cash in hand and at bank. A similar approach was taken

by Schmidt (2014), where asset structure was described in terms of: current assets; long term

investments and funds; Property, Plant and Equipment (PPE); intangible assets; and others

assets. On the other hand, Al Ani (2022) studied the assets structure conceptualizing it as a

component of fixed assets and current assets.

According to Ariyani, Pangestuti, and Raharjo (2018), asset structure is the sum of all

assets owned by a corporation in running its business, which includes both current and fixed

assets. In other words, the asset structure is a variable that represents the fixed and current assets

employed in business operations. Asset structure, according to Ukhriyawati, Ratnawati, and

Riyadi (2017), reflects the balance, or the ratio between fixed assets and total assets; it is the

structure of assets in terms of how much fund is allocated in each component of assets, including

fixed assets and current assets.Firms cannot begin or expand without assets since they require
assets to manufacture their products (Reyhani, 2012). Delcoure (2006) discovered a link between

asset structure and business value. It indicates that organizations with relatively significant

tangible assets will have a greater potential to raise the volume of their operations.

The asset structure of a firm is important since it has been used in the literature as a

measure of firm size (Alzoubi, 2020; Li & Chen, 2018). Assets demonstrate a company's ability

to thrive and compete with other companies (Reyhani, 2012). According to Nyamasege et al.

(2014), fixed assets represent firm development and value by demonstrating the size of the asset

structure that may be pledged as collateral to support company profitability, growth, and value.

According to CampelloandGiambona(2010), there is a strong relationship between the structure

of assets and structure of capital. They added that firms cannot borrow the money without a

strong assets structure and the creditors examine tangible assets when they decide to lend money

to others. Similar idea can be found in Brigham & Houston (2006) who stated that investors will

easily believe by looking at the assets a firm has as collateral for funds they issue.

2.1.3 Capital structure

According to Yakubu and Oumarou (2023), a company's capital structure is the

combination of debt and equity it uses to fund its operations and investments. To put it simply, it

is the proportion of a company's debt, stock, and other long-term instruments that are used to

finance its long-term asset investments (Collins, Filibus& Clement, 2012). Fundamental to

financial management, capital structure affects a company's cost of capital, risk profile, and

overall financial stability (Graham & Harvey, 2001). Furthermore,a definition by Van Horne and

Wachowicz (2007) viewscapital structure as a mix or proportion of the company's long-term

permanent funding indicated by debt, preferred stock equity and ordinary shares.
 It is crucial to remember that the theory of capital structure is strongly tied to the cost of

capital ofa given company, and that the main goal of capital structure decisions is to maximize

the market value of the company by selecting the right combination of long-term funding sources

(Isaac, 2014). The firm's overall cost of capital will be reduced by this capital mix, often known

as the optimal capital structure (Isaac, 2014; Baha, Levy &Hasnaoui, 2023). According to Isaac

(2014), there is still debate on the existence of an ideal capital structure for specific businesses.

The debate is on whether a company can actually alter its cost of capital and valuation by

changing the type of financing it uses (Besley& Brigham, 2000; Ross,Westerfield& Jaffe, 2002).

Harris and Raviv (1991) argued that the evaluation of the capital structure of companies

is imperative because, not only does it affect a firm’s market value but that it also affects its real

decisions about employment, production, and investment. Also, the capital structure of a

company is influenced by several factors, namely: interest rates, earnings stability, asset

structure, the level of risk from assets, the amount of capital needed, the state of the capital

market, the nature of management and the size of a company (Ahmed, Ali &Hágen, 2023).

To sum up, nothing matters more to a startup company than obtaining funding (Brigham

&Daves, 2004). However, they contend that a business's ability to raise capital can have a

significant impact on its performance. This logic might hold true for all firms, not just startups.

The mix of debt and equity in a company's capital structure is determined by a number of

variables, including the firm's attributes, the state of the economy, and the management's goals

and perspectives. According to Karadeniz et al. (2009), management's top goal is to determine

the optimal capital structure by weighing the advantages and disadvantages of using both debt

and equity.
2.1.4 Debt structure

Zietlow, Hankin andSeidner (2007) noted that debt is one of the important items in the

financial structure of companies and it provides a medium for corporate financing as firms

borrow money in order to obtain the capital that they require for capital expenditure. It represents

any agreement between a lender and a borrower: notes, certificates, bonds, debentures,

mortgages and leases. Debt can either be short-term or long-term (Modugu, 2019). According to

Zietlow, Hankin and Seidner (2007), short-term debt represents funds needed to finance the daily

operations of the firm, such as trade receivables, short-term loans and inventory financing. These

types of funds' repayment schedules take place in less than one year. Long-term financing is

usually acquired when firms purchase assets such as buildings, equipment or machinery. The

scheduled repayments for these funds extend over periods longer than one year (Zietlow,

Hankin&Seidner 2007; Modugu, 2019).

The main characteristic of debt financing is that the amount borrowed, plus interest, must

be paid back to the providers of debt over a given period of time (Zeitun&Goaied, 2022). The

interest rate that must be paid on the borrowed money, together with a repayment schedule will

be set out in the contract between the lender and the borrower (Poursoleyman,

Mansourfar&Abidin, 2023). If the borrower does not fulfil their obligations set out in the

contract, it can negatively impact on their credit rating, which in turn can make it more difficult

for them to obtain funds in the future and it can also lead to financial failure (Zeitun&Goaied,

2022). Even if a firm suffers financially and is not able to make the scheduled payments, they

still have an obligation towards the debt providers (Shah &Hijazi, 2004).

In reality, corporate performance and market value are more likely to be affected

differently depending on the levels of debt with different maturities (Wu et al., 2022). With a
high level of short-term debt, a firm’s debt and bankruptcy costs are high (Gordon, 1971; Mu,

Wang & Yang, 2017), with it also being more constrained by debt contracts due to the creditor–

management agency problem. According to them, creditors may pressure managers to avoid the

misuse of debt to ensure their loans are repaid. Managers will thus be placed under greater

pressure to invest in highly profitable projects that enhance performance or face the threat of

being dismissed.

Moreover, using more debt increases tax deductibility (Scott, 1977; Harris &Raviv, 1991)

and leads to an upsurge in returns on equity for shareholders seeking to reduce the principal–

agent problem. The level of monitoring is higher for short-term debt than debt with long-term

maturity, because it must be renewed regularly (Wang & Chiu, 2019). A firm’s cost of

borrowing and distress are relatively low with a low level of short-term debt, so there is less

pressure and/or incentive for managers to enhance performance (Scott, 1977). Low levels of

short-term debt therefore negatively affect performance (Scott, 1977) and subsequently; market

value.

2.1.5 Market value

According to Fasua (2021), market value means the value of a firm in accordance with

the stock market. It is also the price attached to identifiable assets would have in the marketplace.

This is the same as market capitalization of a publicly traded firm. It is the highest value that a

willing purchaser will offer for an asset and the lowest value at which a willing vendor will give

it when both of them have all the useful data about the procurement and the asset has been

exposed to the market for a reasonable period (Saka, 2021; ICAN, 2020). Market value is the

projected price for which an asset, or liability, would exchange between willing purchaser and
vendor in an independent transaction, consequent to proper marketing and what both parties

acted upon with knowledge, consciousness and freedom from compulsion (Saka, 2021). It

represents the price an individual is willing to invest in a business or in form of asset and it is the

firm’s worth in a financial market (Fasua, 2021).

A company’s market value is a good indication of investors’ perceptions of its business

prospects (Truong et al., 2022). The range of market values in the marketplace is enormous,

ranging from a company with the smallest capital base to the biggest and most successful

company operating in the stock market (Rowland et al., 2019). According to Ahmed (2019),

market value is determined by the valuations or multiples accorded by investors to companies,

such as price-to-sales, price-to-earnings, enterprise value-to-earnings before interest tax and

Dividend, and so on. Changes in these metrics could cause a change in market value.

Market value can fluctuate a great deal over periods of time and is substantially

influenced by the business cycle (Janicka, Pieloch-Babiarz&Sajnóg, 2020). According to them,

market values plunge during the bear markets that accompany recessions and rise during the bull

markets that are a feature of economic expansion. Market value is also dependent on numerous

other factors, such as the financial structure; the sector in which the company

operates,company’s profitability, debt load and the broad market environment. Market value for

a firm may diverge significantly from book value or shareholders’ equity (Ahmed, 2019). A

stock would generally be considered undervalued if its market value is well below book value,

which means the stock is trading at a deep discount to book value per share (Omura, 2005). This

does not imply that a stock is overvalued if it is trading at a premium to book value, as this again

depends on the sector and the extent of the premium in relation to the stock’s peers (Omura,

2005).
2.1.6 Market price per share (MPS)

For this study, we measure market value using the market price per share. A share price is

the price of a single share of a company’s stock (Thapa, 2019). As per Thapa (2019), share prices

in a publicly traded company are determined by market supply and demand. Share price is

volatile because it largely depends upon the expectations of buyers and sellers. Bloomfield and

O’Hara (2000) stated that share price is directly related to the earnings of the firm as well as to

the dividends declared by the firm. However, when viewed over short periods, the relationship

between share price, earnings, and dividends could be irrational (Bloomfield &O’Hara, 2000).

The volatility of ordinary stock is a measure used to define risk, and represents the rate of

change in the price of a security over a given time (Kinder, 2002). The greater the volatility, the

greater the chances of a gain or loss in the short run is. Volatility has to do with the variance of a

security’s price. Thus, if a stock is labelled as volatile, its price would greatly vary over time, and

it is more difficult to say in certainty what its future price will be (Joo& Park, 2021). Investors’

preference is for less risk. The lesser the amount of risk, the better the investment is (Kinder,

2002). In other words, the lesser the volatility of a given stock, the greater its desirability is.

According to Ahmad (2019), volatility of stock returns can depend on a variety of

internal variables ranging from volume of trade, P/E (price earning) ratio, retained earnings,

dividend payout ratio and external variables such as economic policies, political situations and

state of global economy and even on investors’ psychology which is studied under the umbrella

of behavioural finance.

2.1.7 Relationship between financial structures and market price per share
2.1.7.1 Relationship between asset structure and market price per share

The ratio of non-current assets to total assets will be used in this study to determine the

asset structure. The ratio of non-current assets to total assets is a widely recognized metric that

significantly impacts a company's market value. Rationally thinking, this ratio acts as a gauge of

risk, stability, and strategic focus since it shows the percentage of fixed assets and long-term

investments. Positive market perceptions may be supported by a higher ratio, which would imply

a stable asset base, whereas a lower ratio might suggest more flexibility and liquidity. Important

considerations include the effect of amortization and depreciation on earnings, conformity to

industry standards, and the intelligent distribution of resources among non-current assets. In

addition to return on assets (ROA) and general market sentiment, investors frequently examine

this ratio because companies that manage their asset structure well can increase their market

value (share price) by indicating stability and potential for growth.

According to Setiadharma and Machali (2017), the condition of the company's assets may

affect the company's funding policy. They added that companies that have more current assets in

their asset structure tend to use debt to meet their financing activities, while firms with more

fixed assets tend to use their own capital to meet their financing activities. A firm that has

suitable asset for collateral will get loan, which will make the firm getting the source of funds

easily, which increases market price.

In the literature, Saleh, Priyawan and Ratnawati (2015) found that asset structure has a

positive significant effect on company growth, profitability and company value. Similar finding

exists in Nyamasege et al. (2014) who found a positive relationship between asset structure and

market value.ZhengSheng,Nuo and Zhi (2013) also found that asset structure has positive

significant effect on value and significant meaning, likewise;Olatunjiand Tajudeen (2014) who
concluded that investments in fixed assets have strong and statistically significant positive

impact on profitability. In Martina (2015), the relationship between tangible assets and long-term

leverage was positive in all observed years and statistically significant.Okwo,Okelue and

Nweze(2012) found a positive but insignificant relationship between the level of investment in

fixed assets and operating profit.On the other hand, Mawih (2014) concluded that the structure of

assets does not have a significant impact on profitability in terms of ROE. Negative relationship

between fixed assets and financial performance however, exists in Okobo and Ikpor (2017).

2.1.7.2 Relationship between capital structure and market price per share

In common parlance, keeping an adequate equity ratio can boost market value by

attracting investors looking for a balanced risk-return profile. A well-structured capital mix

reduces the weighted average cost of capital (WACC), influencing market value positively

through greater present values for future cash flows. A conservative equity ratio also gives

financial flexibility, allowing the company to access external money as needed, and generates a

positive reputation among investors. On the other side, a high equity ratio may result in a higher

cost of capital, thereby lowering returns on equity and limiting financial leverage. Furthermore,

an unbalanced capital structure may limit financial flexibility, limiting the company's capacity to

capitalize on growth prospects.

According to Yasmin and Rashid (2019), negative relationship exists between capital

structure and firm performance. Similar findings exist in Sánchez-Vidal, Hernández-Robles

andMínguez-Vera (2020) and also Haifeng et al. (2021) who found that high equity reduces firm

efficiency which can potentially harm market value. In addition, Shaikh et al. (2022) found that
capital structure negatively affects financial performance. In contrary, Collins, Filibus and

Clement (2012) found a positive relationship between capital structure and market value.

2.1.7.3 Relationship between debt structure and market price per share

Both long-term and short-term debts are important measures of a firm’s financial health

and are significant variables in determining a firm’s performance (Hernandez-Canovas&Koeter-

Kant, 2008) and in turn, market value. Long-term debts show the percentage of assets financed

with debt which is payable after more than one year (Jones & Edwin, 2019). It includes bonds

and long-term loans. Generally, these bonds and loans carry a higher interest rate, as lenders

demand a higher return in exchange for taking on the greater risk of loaning money over a long

period of time (Jones & Edwin, 2019). In reality, long-term debt limits managerial discretion by

making access to new funds and over-investment less likely (Hart & Moore, 1995). Jones and

Edwin (2019) found positive relationship between long-term debt and firm’s performance.

Short term debt, on the other hand, is the best financing tool since it is perceived to be

cheaper or less costly for firms (Nwude, Itiri&Agbadua, 2016). According to Olaniyiet.al (2015),

short-term debt is an account shown in the current liabilities portion of a firm’s statement of

financial position and it comprises of any debt incurred by a firm that is due within a year

period.In previous studies, short-term debt was found to be positively correlated with firm’s

growth opportunities (GarciaTerul& Martinez-Solano, 2007). Moreover, Onoja&Ovayioza

(2015) found that short-term debts are superior for limiting managerial discretion and reducing

moral hazard on the firm’s side. Equally, studies by Onoja&Ovayioza (2015), Yan (2013); Weill

(2008); and Zeitunand Tian (2007) found evidence in support of a positive association between
short-term debt and firms’ profitability. However, Makanga (2015) revealed a negative but

insignificant relationship between short-term debt and corporate performance (return on assets).

2.1.8 Measurement of variables

From prior studies, asset structure was measured as the ratio of fixed or non-current

assets to total assets (Temuhale&Ighoroje, 2021), capital structure was measured as the ratio of

equity to total long term funds (Saleh, Priyawan&Ratnawati, 2015; Collins, Filibus& Clement,

2012), debt structure was measured as the ratio of long-term debt to total debt

(Abuamsha&Shumali, 2022; Githaigo&Kabiru, 2015), and market value was measured as

market price per share (Collins, Filibus& Clement, 2012). Therefore, for this study, asset

structure would be measured as the ratio of fixed or non-current assets to total assets, capital

structure would be measured as the ratio of debt to total equity, debt structure would be

measured as the ratio of long-term debt to total debt, and market value would be measured as

market price per share.

2.2 Theoretical framework

2.2.1 Signalling theory by Spence (1973)

Signalling theory demonstrates the information asymmetry between corporate

management and other parties interested in the information and is basically concerned with

eliminating this information asymmetry between two parties (Spence, 1973). It refers to

behaviour in which two parties have unequal access to information, with one side often deciding

whether and how to transmit the information and the other deciding how to interpret it (Connelly

et al., 2010). It seeks to explain how actors can make decisions when one party has informational
advantage, with equilibrium achieved when a signal's predictions are confirmed by the receiver's

experience (Bergh et al., 2014).

In the signalling scenario, the more knowledgeable party will convey credible

information to the less knowledgeable side in order to reduce asymmetry (Horne &Wachowicz,

2009). Corporate managers can send signals by taking certain decisions, for example, financial

structure, which is used by uninformed parties to make decisions (Horne &Wachowicz, 2009).

Furthermore, manager salary and perks can be set depending on the company's market worth,

therefore in this scenario, the management can use knowledge not owned by other parties to

enhance corporate value (Friske, Hoelscher&Nikolov, 2022).

In this study, we would investigate the theory of how a company's financial structure can

serve as a signal for the potential of the financial markets, resulting in changes to the share price.

Companies are believed to work toward their goals and can indicate their prospects for the future

by altering their capital structure. This is because the market perceives that a firm's value is

increased when it has more debt because it provides greater tax shields or lowers the cost of

bankruptcy.

Myers and Majluf (1984) made the assumption in Isaac (2014) that managers of the firms

have better knowledge of the true value of the companies and will, therefore, schedule a new

equity issue if the market price surpasses their estimate of the stock value, i.e., if the market

overvalues the stocks. Investors will perceive the announcement of an equity issue as a signal

that the listed stocks are overvalued because they are aware of the information asymmetry, which

will result in a negative price reaction. Narayanan (2008) supports this claim by arguing that if a

company raises too much capital through equity issues, the market may interpret it as a lack of

reserves or cash flows, which could lead to an undervaluation of the company's shares.
 However, when internal equity (retained earnings) is insufficient for the necessary

investment opportunity, a company must raise external equity (Graham & Harvey, 2001). The

share prices of companies can occasionally decrease when investments are financed with outside

equity. Consequently, it is preferable to accumulate reserves in order to enable a larger share of

capital requirements to come from internal sources. Additionally, a company that invests in

liquid current assets will benefit from the sufficient cash flows generated by those assets to cover

its current liabilities, as stated by Eriotis et al. (2007). Nonetheless, management needs to keep

current assets and current liabilities in the best possible balance. A firm may give the impression

to investors that it has a lot of money invested in non-productive assets like excess cash,

marketable securities, or inventory if its liquidity ratio is excessively high (current assets

compared to current liabilities). As previously mentioned, the shareholders may find this

problematic as those funds could be better utilized to increase their wealth.

This theory serves as the anchor theory for the research and is pertinent because it

explains how a company can communicate with the financial market through its financial

statements and actions, such as the issuance of shares, the acquisition of assets, the taking on of

debt, and so on. According to the signalling theory, the way the market interprets or react to

these signals can have an impact on share prices.

2.2.2 Trade off theory by Modigliani and Miller (1958)

Modigliani and Miller (1958) introduced the trade-off theory when they first began their

groundbreaking work on capital structure in the field of corporate finance. Trade-off theory of

capital structure (Baxter, 1967; Kraus &Litzenberger, 1973) suggests that firms choose their

capital structure by balancing the advantages of borrowing, mainly tax savings, with the costs
associated with borrowing including bankruptcy costs. This trade-off implies the existence of a

target leverage that maximizes the value of the firm. The existence of a target, which is at the

heart of the theory, requires that any deviation from that target leverage should be adjusted.

In Ahmadimousaabad et al. (2013), static trade-off theory indicates that there is an

optimal debt ratio that helps to maximize a firm's value by focusing on cost and benefit analysis

of debt. When the advantages of debt issue outweigh the increasing present value of costs

associated with more debt issuance, the optimal point is reached (Myers, 2001). The main

advantage of debt is that it reduces interest payments. Such advantages encourage businesses to

borrow. Miller (1977) however, emphasizes that the existence of personal taxes and, in some

cases, non-debt tax shielding complicates this straightforward effect (DeAngelo&Masulis, 1980).

Furthermore, equity issuance implies a shift away from optimal, which might be interpreted

negatively. Myers (1984) went on to say that they would prefer to issue equity if they believed it

was underpriced in the market. On the contrary, investors become aware that the resulting equity

issuance is either appropriately priced or mispriced. As a result, equity issuance causes investors

to react unfavourably, and management is hesitant to issue equity.

The trade-off theory is crucial to this research because it explains how capital structure

can lead to cost reductions through tax shielding, maximizing net income and, hence, market

value. This theory seeks to establish a link between the debt-to-equity ratio, equity to long term

funds ratio and market value. It also places a premium on asset structure and tangibility

(Serrasqueiro&Caetano, 2015). They argue that tangible assets can be utilized as collateral in the

event of a firm's insolvency, protecting creditors' interests. According to Michaelas et al. (1999),

firms with valuable tangible assets that may be used as collateral have better access to external
finance and likely have higher levels of debt and also high capacity, which can lead to higher

profit levels than firms with low levels of tangible assets.

2.3 Empirical framework

Ankomah et al. (2023), utilizing secondary data gathered from listed companies traded on

the Ghana Stock Exchange (GSE) during the period from 2016 to 2020, specifically studied the

effect of short-term debt, long-term debt, and total debts on the operational efficiency of listed

non-financial companies in Ghana. The findings revealed that as the accumulation of debt within

a firm increase, there is a corresponding decrease in return on assets. Additionally, certain firm-

specific variables exhibited small but noteworthy effects on the profitability of enterprises. In

light of these results, the study offered practical recommendations. Corporate finance managers

were advised to meticulously manage working capital to ensure the availability of adequate cash

for ongoing operations. Moreover, in situations where the acquisition of short-term borrower

facilities becomes inevitable, administrators were urged to exercise caution, ensuring that the

total amount of short-term obligations as a percentage of the capital structure remains below the

sum of non-current liabilities and equity in total assets. These measures were suggested to

maintain financial stability and promote responsible corporate financial management.

Bui, Nguyen and Pham (2023) explored the relationship between capital structure and

firm value among companies listed on the Vietnamese stock market, utilizing data derived from

audited financial statements of 769 companies spanning from 2012 to 2022, resulting in 8459

observations. Utilizing diverse estimation methods, including ordinary least squares (OLS), fixed

effects model (FEM), random effects model (REM), and generalized least squares (GLS), the

research examined the impact of capital structure on key financial indicators: return on assets
(ROA), return on equity (ROE), and Tobin’s Q. The results revealed a positive influence of the

debt ratio on ROA, ROE, and Tobin’s Q, with Tobin’s Q demonstrating the most significant

impact (0.450) and ROA exhibiting the least pronounced effect (0.011). Conversely, the long-

term debt ratio did not significantly affect firm value. Intriguingly, both short-term and long-term

debt ratios displayed negative effects on ROA, ROE, and Tobin’s Q, with the most substantial

impact observed on Tobin’s Q reduction (0.562). In light of these findings, the authors provided

pertinent recommendations for companies, investors, business leaders, and policymakers, aiming

to guide informed decision-making in selecting an optimal and prudent capital structure.

Almomani et al. (2022)investigated whether there is an impact of financial leverage in the

capital structure on firm market value, andwhether profitability and size of firms play a

moderating effect role on the impact relationship of financial leverage on firm market value. The

cluster sampling method was used in the selection of the sample among the listed firms at

Amman Stock Exchange, where the utility-energy and the food-beverage listed firms were the

two cluster, which is selected to constitute the sample. The secondary data covering the period

2011-2020, of the entire listed 5 utility-energy and 8 food beverage firms, had collected and used

in the analysis and hypotheses testing. Tobin’s Q was used as an indicator for firm value, and

debt ratio was used as a measure of debt in the capital structure mixing. Profitability was

measured through the return on assets ratio, while the natural logarithms of total assets was used

as a measure for firm size. Using the regression method, the study showed that debt in the capital

structure has insignificant impact on firm value, while the results demonstrated that profitability

and firm size, each of which, played a moderating effect role in the effect relationship of debt in

the capital structure, on firm market value.

 Alfawareh et al. (2022) analyzed the relationship between capital structure and firm

performance, with a focus on companies listed on the Amman Stock Exchange (ASE). The study

utilized a sample of 95 non-financial firms listed on ASE, covering the period from 2013 to

2017. The analysis employed the fixed effect model for regressions, revealing insights into the

relationships between various variables representing capital structure (total debt to total assets,

long term debt to total assets) and firm performance measured by return on assets and Tobin's Q.

The results indicated that variables such as sales growth and total debt to total assets had a

statistically positive and significant relationship with firm performance. In contrast, long term

debt to total assets and liquidity showed statistically insignificant relationships with firm

performance. Additionally, tangibility exhibited a statistically negative and significant

relationship with Tobin's Q and return on assets. The study's findings contributed valuable

insights to top managers, aiding them in optimizing capital structures to maximize shareholders'

wealth in the Jordanian business environment. Moreover, the empirical evidence provided by this

study is valuable to other researchers exploring the influence of capital structure on firm

performance.

Ferriswara, Sayidah andAgusBuniarto(2022)examined corporate governance, capital

structure, financial performance, and firm value in the Jakarta Islamic Index. The technique of

data analysis was Partial Least Square (PLS), with structural equations (SEM) based on

components or variants, on annual data from 2015 to 2021 to examine the variables that affect

firm value on the Jakarta Islamic Index (JII). The findings showed that two determinants

significantly affect firm value from the five hypotheses proposed. Financial performance had a

significant effect on firm value. Corporate governance and capital structure factors did not affect

firm value, but corporate governance positively and negatively impacted financial performance.
The practical implications of this study emphasized the critical role of corporate governance and

capital structure in improving financial performance and firm value. Investors will respond to

good corporate governance as a positive signal that the company is superior to other companies.

The corporate governance variable had a significant effect on financial performance with a

negative coefficient direction, indicating that corporate governance has not been implemented

optimally in the proxy company with low proportion of independent commissioners and

independent audit committees.

Nwafor, Yusuf, and Shuaibu (2022) aimed to investigate the impact of capital structure

on the profitability, specifically measured by return on assets, of firms in Nigeria, with a focused

examination of pharmaceutical companies over the financial years spanning from 2011 to 2020.

Two specific objectives, research questions, and hypotheses were formulated for the study,

which employed an ex-post facto research design. Secondary data were sourced from the annual

financial reports of four listed pharmaceutical companies and analysed using pooled ordinary

least square regression analysis, along with preliminary analyses such as descriptive statistics

and correlation analysis. The findings indicated that approximately 30.9% of the total variation

in return on assets was explained by variations in the capital structure variables included in the

model. Moreover, the study revealed a negative relationship between the Total debt ratio (TDR)

and the profitability of pharmaceutical firms in Nigeria, while the Debt equity ratio (DER)

exhibited a positive correlation with profitability. As a recommendation, the study suggested that

pharmaceutical companies in Nigeria should exercise caution in leveraging debt, as it was found

to be associated with decreased profitability. Instead, the firms were advised to rely more on

internal sources of finance, considered a cost-effective and reliable financing option.

 Abdullah andTursoy (2021)examined the relationship between firm performance and

capital structure. The study sample consists of the non-financial firms listed in Germany during

the period 1993–2016. The European stock market transition to IFRS in 2005 was also

considered as a shifting point that might have influenced the extent of the relationship. They

observed that more than 60% of the total assets of German non-financial firms were financed

through debt, i.e. they were highly levered compare to similar countries. The results confirmed a

positive relationship between firm performance and capital structure. They also found that IFRS

adoption has led to increased firm performance of our sample, whereas it weakened the

relationship between capital structure and firm performance. One plausible explanation for the

positive association between capital structure and firm performance was the benefits of the tax

shield and the lower costs of issuing debt compared to equity.

Ayange et al. (2021) investigated the impact of capital structure measures on the

performance of manufacturing firms in Nigeria, utilizing annualized panel data from 1999 to

2018 for a sample of 15 quoted firms across various sectoral classifications. Financial firms were

excluded due to the unique nature of their capital structure and stringent legal requirements

governing their financing choices, with the study concentrating solely on non-financial firms.

The capital structure measures considered included the book value and market value of the firm.

The results revealed that performance, as proxied by return on equity (ROE) and Tobin’s Q,

significantly influenced short-term debt assets (SDTA), firm size (SIZE), long-term debt to

assets (LDTA), and total debt to assets (TDTA). Furthermore, return on assets (ROA) exhibited a

negative influence on long-term debt to assets (LDTA), debt to equity ratio (D_E), and total debt

to assets (TDTA). Notably, Tobin’s Q emerged as a more robust measure of performance

compared to other book value metrics. The study underscored the prevalence of short-term debt
financing among Nigerian firms, aligning with the Pecking Order Theory. It emphasized that no

single theory could comprehensively explain the impact of capital structure on firm performance

during the period under review.

Khan, Qureshi and Davidsen (2021) analyzed the impact of capital structure policy, being

a key managerial decision, on the firm value. For this purpose, the study develops a system

dynamics-based corporate planning model for an oil firm, including the operational as well as

financial processes. Various scenarios and capital structure policies have been designed and

simulated to identify the policy that helps in increasing the firm value. The results demonstrate

that increase in debt percentage in capital structure mix increase the firm value.

Luckyardi et al. (2021)aimed to determine the effect of dividend policy and capital

structure on agricultural sector’s company value. The research method used was verification

method with quantitative approach. The case study was conducted on agricultural sector

companies listed on the Indonesia Stock Exchange in 2015-2019. The sample used was Price

Book Value (PBV) and Debt to Equity Ratio (DER) in 14 agricultural sector companies obtained

from Financial Statements published on the Indonesia Stock Exchange website: www.idx.co.id

for the period 2015-2019. The results showed that the variables of Dividend Policy and Capital

Structure had a negative and not significant effect on company value.

Ngatno andYoulianto (2021)examined the moderating effect of corporate governance on

the relationship between capital structure and firm performance. The study utilized secondary

data in the form of financial reports at the end of 2019 from micro-financial institutions (rural

banks) with a total of 506 units. Data were analyzed using the Moderated Regression Analysis.

Results indicated that capital structure financing decisions have a positive contribution to

financial performance. However, this only applied to short-term debt. Otherwise, long-term debt
had a negative and insignificant effect on both return on assets and return on equity. These

results supported the view of the pecking order theory, as empirical evidence that the opposite

effect between firm profits and capital structure. The results of the moderation analysis showed

that only the size of the board of commissioners can strengthen the relationship between capital

structure and company performance, while board size and ownership concentration were not able

to moderate the relationship between capital structure and company performance.

Oke and Fadaka(2021) analysed the effects of capital structure on the financial

performance of listed food and beverage companies in Nigeria, specifically examining the

impacts of short-term debt, long-term debt, and leverage on profitability from 2007 to 2016.

Secondary data were collected from the published financial statements of five listed food and

beverage companies in Nigeria, utilizing an ex-post facto research design. Multiple regression

analysis was conducted using the E-views statistical package. The study's findings indicated that

short-term debt had a significant and positive effect on return on equity (ROE), serving as a

measure of corporate performance, among other variables. The implications suggested that

increased reliance on borrowed funds could lead to interference with the companies' ROE. The

study concluded that both short and long-term debts had significant and positive effects on the

financial performance of food and beverage companies in Nigeria. In terms of recommendations,

the study suggested that companies should prioritize equity financing as a first-line approach in

their business activities.

Putro andRisman (2021)examined and proved the effect of capital structure and liquidity

on firm value as mediated by profitability. The data used in this study were financial reports and

annual reports of infrastructure companies (2014-2018), the sample size was nine companies.

The analysis technique used was panel data regression (pooled data), with descriptive statistical
analysis, stationarity test, regression model selection, classical assumption test, and hypothesis

testing in model suitability test (R2m), individual parameter significance test (t-test), and sobel

test done in the Eviews 10. The results of this study indicated that capital structure and liquidity

have no effect on firm value. Profitability was found to be unable to mediate the effect of capital

structure on firm value, but was able to mediate the effect of liquidity on firm value.

Ahmed andBhuyan (2020) scrutinized the relationship between capital structure and firm

performance of service sector firms from Australian stock market. Unlike other studies, in this

study directional causalities of all performance measures were used to identify the cause of firm

performance. The study found that long-term debt dominates debt choices of Australian service

sector companies. Although the finding was to some extent similar to trends in debt financed

operations observed in companies in developed and developing countries, the finding was

unexpected because the sectoral and institutional borrowing rules and regulations in Australia

were different from those in other parts of the world.

Ali and Faisal (2020) investigated and measured the impact of capital structure,

profitability, and financial performance on the success of business organizations, particularly

focusing on petrochemical companies in Saudi Arabia. The capital structure, representing the

proportion of external funds and internal funds (debt and equity), was a key factor under

scrutiny. It was observed that petrochemical companies in Saudi Arabia predominantly operated

on equity during the period from 2004 to 2016. However, the financial performance exhibited a

negative trend during this period. The research relied on secondary data obtained from the

websites of Saudi Arabian petrochemical companies. Financial Ratio variability analysis and

Trend Indices of financial ratios (TI CBI) were employed to measure and compare the financial

variability and sensitivity of these ratios. Correlations between Trend Indices (TI CBI) of
independent variables and dependent variables were calculated to discern the impact of changes

in debt-equity ratios on other dependent variables. The findings revealed unexpected

performance in petrochemical companies, attributed to resource under-utilization caused by low

demand and reduced product prices influenced by internal and external factors. The study

identified size, demand, production costs, profitable product streams, and the availability of low-

cost external capital as factors contributing to the overall growth and development of the

petrochemical industry in Saudi Arabia.

Bhattarai (2020) examined the effects of capital structure on the financial performance of

insurance companies in Nepal, utilizing data obtained from the annual reports of the respective

insurance companies' websites. The panel data encompassed 14 Nepalese insurance companies

from the fiscal year 2007/08 to 2015/16, resulting in a total of 126 observations. Various

statistical models, including pooled OLS, random effect, and fixed effect models, were employed

for data analysis. In this investigation, return on assets was designated as the dependent variable,

while independent variables comprised total debt ratio, equity to total assets, leverage, firm size,

liquidity ratio, and assets tangibility. The findingsconcluded that equity to total assets, leverage,

and assets tangibility significantly impacted the financial performance of Nepalese insurance

companies. These results provided insights into the dynamics between capital structure

components and financial outcomes within the context of the Nepalese insurance industry.

Hidayat, Rohaeni andNuraeni (2020)determined the effect of capital structure and firm

size on firm value with profitability as a moderating variable in metal sector manufacturing

companies and the like listed on the Indonesia Stock Exchange (BEI) for the 2013-2017 period.

The method used was descriptive-quantitative method. The research sample consisted of 10

companies manufacturing metal sectors and the like which were listed on the IDX for the 2013-
2017 period with annual financial reports through a purposive sampling method. Data analysis

used was Moderator Regression Analysis by processing data using SPSS version 22. The

conclusion of this study was that the capital structure and firm size simultaneously affect the

value of the company. Partially the capital structure affected the value of the company, the size

of the company does not affect the value of the company. Profitability moderated the influence

of capital structure and firm size simultaneously on firm value. Partially profitability moderated

the influence of capital structure on firm value, and profitability did not moderate the influence

of firm size on firm value.

Ibrahim and Isiaka (2020) examined the effect of financial leverage on firm value with

evidence from a sample of selected companies quoted on the Nigerian Stock Exchange. The

study adopted a panel data analysis using secondary data obtained from the financial statements

of the selected companies over the period 2014-2018. The sample of 18 firms studied was

selected through the convenient sampling technique. The level of financial leverage was

denominated by long term debt to equity ratio. Other variables proven in literature to be of

importance when considering firm value such as Total Asset, Return on Asset and the Number of

years for which the firm has been in operation, were utilized as control variables in presenting

the Tobin’s Q model of firm valuation. Data obtained were analyzed by E-VIEWS to determine

the extent of the causal and correlational relationships between the dependent variable and the

regressors. The study determined the degree of causality using the Pooled Ordinary Least

Squares (POLS), Random Effect Panel Data Model(REM) and Fixed Effect Panel Model(FEM)

estimation techniques. The correlation coefficients were estimated using the pairwise correlation

matrix to determine the extent to which financial leverage can predict firm value. The regression

results showed that financial leverage has a significantly negative effect on firm value while the
result of the pairwise correlation showed that there is no significant linear relationship between

leverage and firm value.

Mujwahuzi andMbogo(2020) examined the effects of capital structure on business

profitability in seven processing enterprises listed on the Dar es Salaam Stock Exchange (DSE),

Tanzania. Capital structure was measured by the long-term debt to equity ratio (LTDR), while

business profitability was assessed through Return on Assets (ROA), Return on Equity (ROE),

and Earnings per Share (EPS). Secondary data were collected from the published reports on the

DSE website over a ten-year period from 2009 to 2018. Ordinary Least Squares (OLS)

regression analysis and Karl Pearson Coefficient of Correlation were employed to explore the

relationship between capital structure and business profitability. The results indicated a weak and

statistically insignificant effect of the capital structure indicator on business profitability

measures. The relationship between LTDR and all profitability measures used in the study was

found to be weak and insignificant. Consequently, the study concluded that capital structure is

not a major determinant of a firm's profitability, aligning with the predictions of the Pecking

Order Theory. The recommendation derived from these findings emphasized a moderate and

cautious approach to debt issues by financial managers, despite the potential tax shield benefits,

to minimize the risk of operating under financial distress.

Nkak (2020) assessed the relationship between capital structure and the performance of

quoted industrial goods on the Nigeria Stock Exchange (NSE). The research focused on five

selected firms, utilizing secondary data spanning six years from 2014 to 2019. The multiple

regression model was employed to test hypotheses, with return on equity (ROE) serving as the

dependent variable for measuring performance. The independent variables were represented by

three factors: Non-current debt to total assets (NCD), current debts to total assets (CD), and total
debts to equity (TDE). The findings revealed that two independent variables, NCD and TDE,

exhibited a statistically significant relationship with ROE. However, TDE displayed a negative

relationship with ROE, while the third independent variable, CD, did not show statistical

significance in influencing performance. The study recommended that, when considering the

capital structure of firms, long-term financing should be prioritized, while short-term current

debts should be considered last. Additionally, the study suggested careful matching between

equity and debt to optimize capital structure.

Pham (2020) explored the effect of capital structure on the financial performance of

pharmaceutical enterprises listed on Vietnam's stock market. The researchers constructed a

regression model with return on equity (ROE) as the dependent variable and four independent

variables, including self-financing, financial leverage, long-term asset ratio, and debt-to-assets

ratio. Controlling variables such as firm size, fixed asset rate, and growth were also incorporated.

Data were collected from 2015 to 2019 for all 30 pharmaceutical enterprises listed on Vietnam's

stock market. The least square regression (OLS) method was employed to assess the influence of

capital structure on firms' financial performance. The analysis revealed that the financial

leverage ratio (LR), long-term asset ratio (LAR), and debt-to-assets ratio (DR) exhibited a

positive relationship with firm performance. Conversely, self-financing (E/C) had a negative

impact on return on equity (ROE). Based on these findings, it was recommended that the

Vietnamese government focuses on stabilizing the macro environment to create a favourable

business environment. Pharmaceutical enterprises were advised to adopt a more balanced capital

structure with a higher proportion of debt than equity, diversify loan mobilization channels such

as issuing long-term bonds, and expand their scale appropriately to sustain development and

meet debt obligations.

 Purwanti (2020) studied the effect of profitability, capital structure, company size, and

dividend policy on firm value. The companies in this study were manufacturing companies listed

on the Indonesian stock exchange during the period of 2015 to 2018. The population was all

manufacturing companies listed on the Indonesian stock exchange in 2015-2018. The technique

used in the sampling of this study used a purposive sampling technique. In this study, secondary

data was obtained from the Indonesian Capital Market Directory. Data analysis was done using

descriptive statistics and testing using the classic assumption test. Testing the research

hypothesis using multiple linear regression test, simultaneous test (F test), partial test (t test), and

coefficient of determination test (R2 test), the results showed that simultaneous profitability,

capital structure, company size, and dividend policy significantly influence the value of

manufacturing companies. Partially, profitability had a positive and significant effect on firm

value, capital structure had a positive and significant effect on firm value, company size had a

negative and significant effect on firm value, and dividend policy had positive and not significant

effect on firm value.

Sari andSedana (2020) determined the effect of profitability and liquidity on firm value

and determined the role of capital structure in mediating the effect of profitability and liquidity

on firm value in the construction and building sub-sector companies listed on the Indonesia

Stock Exchange (IDX) for the period 2013-2017. The population in this study were construction

and building sub-sector companies that are listed on the Indonesia Stock Exchange and have

complete financial statements for the period 2013-2017. This study used samples with the census

method. The data analysis technique used was path analysis. Profitability had a positive and

significant effect on capital structure, liquidity had a negative and significant effect on capital

structure, capital structure had a positive and significant effect on firm value, profitability had a
positive and significant effect on firm value, liquidity had a negative and not significant effect on

firm value and capital structure was able to mediate the effect of profitability and liquidity on

firm value.

Sudiyatno et al. (2020) examined the role of profitability as a mediating variable in

influencing firm value. This study used a sample of manufacturing companies listed on the

Indonesia Stock Exchange from 2016 to 2018. The data was panel data, with data analysis using

multiple regression. Based on the Sobel test, profitability played a role in mediating the effect of

firm size on firm value. The effect of firm size on firm value was indirect, however, through

profitability. Therefore, the market price of the shares of large-scale companies would increase if

the resulting profitability was high. The capital structure and managerial ownership directly

influenced firm value. The results showed that managerial ownership and firm size had a positive

effect on profitability, while capital structure had no effect on profitability. Capital structure and

managerial ownership had a negative effect on firm value, while firm size and profitability had a

positive effect on firm value. The main finding of this study was that profitability acts as an

intervening variable in mediating the relationship between firm size and firm value.

Etale and Uzakah (2019) scrutinized the relationship between capital structure and firm

performance in Nigeria, using Aluminum Extrusion Company PLC (ALEX) as a case study.

Return on capital employed was adopted as a proxy for firm performance, while capital structure

components including debt to equity ratio, debt to capital employed ratio, and equity to capital

employed ratio were considered as explanatory variables. Secondary data were collected from

the annual published financial reports of the company spanning from 2009 to 2018. The study

employed descriptive statistics and multiple regression techniques using E-views 9.0 Software

for data analysis. The findings indicated that the debt-to-equity ratio had a significant positive
effect on return on capital employed, the debt to capital employed ratio had a negative influence

on return on capital employed, and the equity to capital employed ratio had no significant

influence on return on capital employed. Overall, the study concluded that capital structure did

not have a significant effect on firm performance at the 5% level. The recommendations included

financing activities with retained earnings and using debt as the last option, in alignment with the

Pecking Order theory. Additionally, future researchers were encouraged to analyse the indirect

effects of capital structure on firm performance, and company managers were advised to be

cautious in using debt financing up to optimal limits.

Ganiyu et al. (2019) studied the impact of capital structure on firm performance in

Nigeria and explored the possibility of a non-monotonic relationship, as predicted by the agency

cost theory of capital structure, especially in cases of excessive debt financing. The study

employed a dynamic panel model on panel data comprising 115 listed non-financial firms in

Nigeria. Specifically, the two-step generalized method of moments (GMM) estimation method

was utilized, recognizing the persistence of the dependent variable by incorporating its lag value

as an explanatory variable in the regression model. The primary findings revealed a statistically

significant relationship between capital structure and firm performance, particularly when debt

financing was employed moderately. However, the paper identified evidence of a non-monotonic

relationship between capital structure and firm performance when Nigerian firms excessively

utilized debt financing, impacting negatively on their performance. These findings supported the

applicability of the agency cost theory in the Nigerian context, albeit with caution, given the

predominant reliance on short-term debt financing in Nigeria as opposed to the long-term debt

financing assumed in the agency cost theoretical proposition.

 Kerim, Alaji and Innocent (2019) investigated the impact of capital structure on the

profitability of listed insurance firms in Nigeria for the period 2013-2017, utilizing a correlation

research design. The data, sourced from published annual financial reports of 15 selected

insurance firms out of the population of 28, were subjected to analysis using the OLS multiple

regression technique. With 75 firm-year panelled observations, the results of the ordinary least

square regression indicated a negative and significant effect of short-term debt on the

profitability of listed insurance firms in Nigeria. Conversely, long-term debt demonstrated a

positive and significant influence on profitability, while premium growth was found to have a

positive and significant effect as well. Consequently, the study recommended that the

management of these insurance firms should aim for an optimal capital structure, emphasizing

increased equity levels and reduced reliance on debts to avoid potential financial constraints and

indebtedness.

Thao (2019) reviewed existing literature on the effect of capital structure on firm value

and conducted an empirical study on non-financial listed companies on Vietnam's Stock market

from 2011 to 2017. Employing the quantile regression method on panel data from 446

companies with 3122 observations, the study revealed that leverage had a positive impact on

firm value when it was low, but the effect was opposite when leverage was high. The findings

indicated that low-value firms could enhance their value by increasing capital through additional

debt, while high-value firms should consider raising capital by issuing more shares. This insight

contributed to a nuanced understanding of the relationship between capital structure and firm

value, providing valuable guidance for companies in optimizing their capital structures based on

their current valuation levels.

 Udeh andNgwoke (2019) scrutinised the effects of capital structure on the financial

performance of listed food and beverage companies in Nigeria, specifically examining the

impacts of short-term debt, long-term debt, and leverage on profitability from 2007 to 2016.

Secondary data were gathered from the published financial statements of five listed food and

beverage companies in Nigeria, employing an ex-post facto research design. Multiple regression

analysis was conducted using the E-views statistical package. The study's findings indicated that

short-term debt had a significant and positive effect on return on equity (ROE), serving as a

measure of corporate performance, among other variables. The implications suggested that

increased reliance on borrowed funds could lead to interference with the companies' ROE. The

study concluded that both short and long-term debts had significant and positive effects on the

financial performance of food and beverage companies in Nigeria. As a recommendation, the

study suggested that companies prioritize equity financing as a first-line approach in their

business activities.

Usman (2019) assessed the impact of capital structure on the financial performance of the

consumer goods industry in Nigeria, focusing on consumer goods companies listed on the

Nigerian Stock Exchange. The sample comprised six selected companies, chosen using the filter

sampling technique, covering a period of five years from 2012 to 2016. The dependent variable

was financial performance, proxied by return on assets (ROA), while the independent variables

included Long-term debt (LTD), Short-term debt (STD), and shareholders’ funds (ROE). Data

extracted from the annual reports and accounts of the selected companies were subjected to

analysis using descriptive statistics, correlation, and regression analysis in E-views 8.0. The

results, tested at a 0.05 (5%) level of significance, indicated that short-term and long-term debts

had no significant impact on the financial performance of listed firms in the Nigerian consumer
goods industry. Conversely, equity was found to have a significant impact on the financial

performance of these listed firms. The study recommended that companies, in determining their

capital structure, should carefully consider and compare the costs and benefits of obtaining a

particular source of capital, avoiding decisions based on unfounded generalizations to ensure

positive outcomes in the long run.

Vega Zavala andSantillán Salgado (2019) looked into the impact of capital structure

changes on the market value of a sample of 69 non-financial firms listed on the Mexican Stock

Exchange over the period 2004 to 2014. Employing Pooled Ordinary Least Squares (OLS),

Fixed Effects (FE), and Random Effects (RE) regressions, the study verified the widely

acknowledged positive influence of leverage on firm value. In other words, there was a clear,

positive, and statistically significant relationship between changes in financial leverage

(represented by debt ratios and debt to invested capital) and changes in Tobin’s Q, utilized as a

proxy variable for firm value. The analysis further revealed variations in the magnitude of

financial leverage coefficients when the sample was distributed into sub-samples based on

factors such as leverage, size, profitability, and risk. Notably, these coefficients remained highly

significant, providing valuable insights into the impact of financial leverage changes on the value

of different types of firms.

Uremadu andOnyekachi (2018) studied the impact of capital structure on corporate

performance in Nigeria, focusing specifically on the consumer goods sector. The analytical

technique employed was multiple regression of ordinary least square (OLS). The results revealed

a negative and statistically insignificant impact of capital structure on the corporate performance

of consumer goods firms in Nigeria. Specifically, long-term debt ratio to total assets and total

debt ratio to equity both exhibited negative and insignificant impacts on returns on assets. The
study concluded that capital structure does not significantly determine firm performance in this

sector. Consequently, the recommendations emphasized caution for managers when utilizing

debt as a source of finance, given the observed negative impact on corporate firms' performance.

The study also advocated for a preference for financing activities with retained earnings and

suggested debt as a last resort, aligning with the pecking order theory. Overall, the study strongly

recommended that corporate firms prioritize equity over debt in financing their business

activities, acknowledging that while debt capital can enhance business value, it reaches a point

where it becomes detrimental or unfavourable to the business.

2.4 Summary and gap in literature

From the empirical review, there is inconclusive evidence on the factors that determine

the market value of companies. While many of the researchers seem to agree that independent

variables (asset structure, debt structure and capital structure) affect the market value of

companies, there is no consensus as per the relationship between the independent variables and

market value of companies. Some of the studies have concluded that there is no relationship

between them, or the relationship is insignificant, while others have concluded that there is

evidence of a relationship.

After reviewing these works, it was discovered that these studies were conducted outside

of Nigeria;Ankomah et al. (2023), Pham (2020), Ali and Faisal (2020), and Bhattarai (2020); and

in Nigeria,Nwafor, Yusuf, and Shuaibu (2022), Ayange et al. (2021), Ganiyu et al. (2019), and

Usman (2019) delved into the financial performance and profitability of various sectors,

excluding insurance firms and ignoring the critical aspect of market value. As a result of this gap,

this study was undertaken.

Table 2.1: Summary of empirical review

Author & Year Market

Methodology Findings Research gap
of Publication studied
Ankomah et al. Ghana Regression The findings revealed that as - Done outside Niger
(2023) analysis the accumulation of debt - Operational efficie
within a firm increase, there is (return on assets)
a corresponding decrease in - Non-financial
return on assets. Additionally, companies
certain firm-specific variables - 2016 to 2020
exhibited small but noteworthy
effects on the profitability of
enterprises. In light of these
results, the study offered
practical recommendations.
Corporate finance managers
were advised to meticulously
manage working capital to
ensure the availability of
adequate cash for ongoing
operations. Moreover, in
situations where the acquisition
of short-term borrower
facilities becomes inevitable,
administrators were urged to
exercise caution, ensuring that
the total amount of short-term
obligations as a percentage of
the capital structure remains
below the sum of non-current
liabilities and equity in total
assets. These measures were
suggested to maintain financial
stability and promote
responsible corporate financial
management.
Bui, Nguyen and Vietnam Multiple The results revealed a positive - Done outside Niger
Pham (2023) regression influence of the debt ratio on - Return on as
analyses ROA, ROE, and Tobin’s Q, (ROA), return
with Tobin’s Q demonstrating equity (ROE),
the most significant impact Tobin’s Q
(0.450) and ROA exhibiting
the least pronounced effect
(0.011). Conversely, the long-
 term debt ratio did not
significantly affect firm value.
Intriguingly, both short-term
and long-term debt ratios
displayed negative effects on
ROA, ROE, and Tobin’s Q,
with the most substantial
impact observed on Tobin’s Q
reduction (0.562). In light of
these findings, the authors
provided pertinent
recommendations for
companies, investors, business
leaders, and policymakers,
aiming to guide informed
decision-making in selecting
an optimal and prudent capital
structure.
Almomani et al. Amman Regression The study showed that debt in - Done outside Niger
(2022) method the capital structure has - Tobin’s Q
insignificant impact on firm - Utility-energy and
value, while the results food-beverage li
demonstrated that profitability firms
and firm size, each of which,
played a moderating effect role
in the effect relationship of
debt in the capital structure, on
firm market value.
Ferriswara, Jakarta Partial Least The findings showed that two - Done outside Niger
Sayidah and Square (PLS) determinants significantly - Corporate governan
AgusBuniarto affect firm value from the five - Financial performan
(2022) hypotheses proposed. Financial - 2015 to 2021
performance had a significant
effect on firm value. Corporate
governance and capital
structure factors did not affect
firm value, but corporate
governance positively and
negatively impacted financial
performance.
Nwafor, Yusuf, Jordan Fixed effect The results indicated that - Done outside Niger
and Shuaibu model for variables such as sales growth - Firm performance
(2022) regressions and total debt to total assets - Non-financial firms
had a statistically positive and - 2013 to 2017
significant relationship with
firm performance. In contrast,
 long term debt to total assets
and liquidity showed
statistically insignificant
relationships with firm
performance. Additionally,
tangibility exhibited a
statistically negative and
significant relationship with
Tobin's Q and return on assets.
The study's findings
contributed valuable insights to
top managers, aiding them in
optimizing capital structures to
maximize shareholders' wealth
in the Jordanian business
environment. Moreover, the
empirical evidence provided by
this study is valuable to other
researchers exploring the
influence of capital structure
on firm performance.
Nwafor, Yusuf, Nigeria Pooled The findings indicated that - Profitability
and Shuaibu ordinary least approximately 30.9% of the - Pharmaceutical
(2022) square total variation in return on companies
regression assets was explained by - 2011 to 2020
analysis variations in the capital
structure variables included in
the model. Moreover, the study
revealed a negative
relationship between the Total
debt ratio (TDR) and the
profitability of pharmaceutical
firms in Nigeria, while the
Debt equity ratio (DER)
exhibited a positive correlation
with profitability. As a
recommendation, the study
suggested that pharmaceutical
companies in Nigeria should
exercise caution in leveraging
debt, as it was found to be
associated with decreased
profitability. Instead, the firms
were advised to rely more on
internal sources of finance,
considered a cost-effective and
 reliable financing option.
Abdullah and Germany They observed that more than - Done outside Niger
Tursoy (2021) 60% of the total assets of - Firm performance
German non-financial firms - IFRS adoption
were financed through debt, - Non-financial firms
i.e. they were highly levered - 1993–2016
compare to similar countries.
The results confirmed a
positive relationship between
firm performance and capital
structure. They also found that
IFRS adoption has led to
increased firm performance of
our sample, whereas it
weakened the relationship
between capital structureand
firm performance. One
plausible explanation for the
positive association between
capital structure and firm
performance was the benefits
of the tax shield and the lower
costs of issuing debt compared
to equity.
Ayange et al. Nigeria Panel data The results revealed that - Financial performan
(2021) regression performance, as proxied by - Long-term debt
return on equity (ROE) and assets (LDTA),
Tobin’s Q, significantly total debt to as
influenced short-term debt (TDTA)
assets (SDTA), firm size - Manufacturing firm
(SIZE), long-term debt to - 1999 to 2018
assets (LDTA), and total debt
to assets (TDTA).
Furthermore, return on assets
(ROA) exhibited a negative
influence on long-term debt to
assets (LDTA), debt to equity
ratio (D_E), and total debt to
assets (TDTA). Notably,
Tobin’s Q emerged as a more
robust measure of performance
compared to other book value
metrics. The study underscored
the prevalence of short-term
debt financing among Nigerian
firms, aligning with the
 Pecking Order Theory. It
emphasized that no single
theory could comprehensively
explain the impact of capital
structure on firm performance
during the period under review.
Khan, Qureshi The results demonstrate that - Done outside Niger
and Davidsen increase in debt percentage in
(2021) capital structure mix increase
the firm value.
Luckyardi et al. Indonesia Verification The results showed that the - Done outside Niger
(2021) method with variables of Dividend Policy - Price Book V
quantitative and Capital Structure had a (PBV)
approach negative and not significant - Debt to Equity R
effect on company value. (DER)
- Agricultural sector
- 2015-2019
Ngatno and Indonesia Moderated Results indicated that capital - Done outside Niger
Youlianto (2021) regression structure financing decisions - Corporate governan
analysis have a positive contribution to - Firm performance
financial performance. - Rural banks
However, this only applied to - 2019
short-term debt. Otherwise,
long-term debt had a negative
and insignificant effect on both
return on assets and return on
equity. These results supported
the view of the pecking order
theory, as empirical evidence
that the opposite effect
between firm profits and
capital structure. The results of
the moderation analysis
showed that only the size of the
board of commissioners can
strengthen the relationship
between capital structure and
company performance, while
board size and ownership
concentration were not able to
moderate the relationship
between capital structure and
company performance.
Oke and Fadaka Nigeria Multiple The study's findings indicated - Profitability
(2021) regression that short-term debt had a - Food and bever
analysis significant and positive effect companies
 on return on equity (ROE), - 2007 to 2016
serving as a measure of
corporate performance, among
other variables. The
implications suggested that
increased reliance on borrowed
funds could lead to interference
with the companies' ROE. The
study concluded that both short
and long-term debts had
significant and positive effects
on the financial performance of
food and beverage companies
in Nigeria. In terms of
recommendations, the study
suggested that companies
should prioritize equity
financing as a first-line
approach in their business
activities.
Putro and Risman Indonesia Panel data The results of this study - Done outside Niger
(2021) regression indicated that capital structure - Profitability
and liquidity have no effect on - Liquidity
firm value. Profitability was - Infrastructure
found to be unable to mediate companies
the effect of capital structure - 2014-2018
on firm value, but was able to
mediate the effect of liquidity
on firm value.
Ahmed and Australia Regression The study found that long-term - Done outside Niger
Bhuyan (2020) analysis debt dominates debt choices of - Service sector
Australian service sector
companies. Although the
finding was to some extent
similar to trends in debt
financed operations observed
in companies in developed and
developing countries, the
finding was unexpected
because the sectoral and
institutional borrowing rules
and regulations in Australia
were different from those in
other parts of the world.
Ali and Faisal Saudi Financial Ratio The findings revealed - Done outside Niger
(2020) Arabia variability unexpected performance in - Profitability
 analysis and petrochemical companies, - Financial performan
Trend Indices attributed to resource under- - Petrochemical
of financial utilization caused by low companies
ratios (TI CBI) demand and reduced product - 2004 to 2016
prices influenced by internal
and external factors. The study
identified size, demand,
production costs, profitable
product streams, and the
availability of low-cost
external capital as factors
contributing to the overall
growth and development of the
petrochemical industry in
Saudi Arabia.
Bhattarai (2020) Nepal Pooled OLS, The findingsconcluded that - Done outside Niger
random effect, equity to total assets, leverage, - Financial performan
and fixed effect and assets tangibility - Equity to total asset
models significantly impacted the - 2007/08 to 2015/16
financial performance of
Nepalese insurance companies.
These results provided insights
into the dynamics between
capital structure components
and financial outcomes within
the context of the Nepalese
insurance industry.
Hidayat, Rohaeni Indonesia Moderator The conclusion of this study - Done outside Niger
and Nuraeni Regression was that the capital structure - Profitability
(2020) Analysis and firm size simultaneously - Metal se
affect the value of the manufacturing
company. Partially the capital companies
structure affected the value of - 2013-2017
the company, the size of the
company does not affect the
value of the company.
Profitability moderated the
influence of capital structure
and firm size simultaneously
on firm value. Partially
profitability moderated the
influence of capital structure
on firm value, and profitability
did not moderate the influence
of firm size on firm value.
Ibrahim and Nigeria Pooled The regression results showed - Return on asset
Isiaka (2020) Ordinary Least that financial leverage has a - Number of years
Squares significantly negative effect on which the firm
(POLS) firm value while the result of been in operation
the pairwise correlation - Tobin’s Q
showed that there is no - Financial leverage
significant linear relationship - 2014-2018
between leverage and firm
value.
Mujwahuzi and Tanzania Ordinary Least The results indicated a weak - Done outside Niger
Mbogo (2020) Squares (OLS) and statistically insignificant - Profitability
regression effect of the capital structure - Long-term debt
analysis and indicator on business equity ratio (LTDR)
Karl Pearson profitability measures. The - Processing enterpris
Coefficient of relationship between LTDR - 2009 to 2018
Correlation and all profitability measures
used in the study was found to
be weak and insignificant.
Consequently, the study
concluded that capital structure
is not a major determinant of a
firm's profitability, aligning
with the predictions of the
Pecking Order Theory. The
recommendation derived from
these findings emphasized a
moderate and cautious
approach to debt issues by
financial managers, despite the
potential tax shield benefits, to
minimize the risk of operating
under financial distress.
Nkak (2020) Nigeria Multiple The findings revealed that two - Performance
regression independent variables, NCD - Non-current debt
model and TDE, exhibited a total assets (NCD)
statistically significant - Current debts to t
relationship with ROE. assets (CD)
However, TDE displayed a - Industrial go
negative relationship with companies
ROE, while the third - 2014 to 2019
independent variable, CD, did
not show statistical
significance in influencing
performance. The study
recommended that, when
considering the capital
structure of firms, long-term
 financing should be prioritized,
while short-term current debts
should be considered last.
Additionally, the study
suggested careful matching
between equity and debt to
optimize capital structure.
Pham (2020) Vietnam Regression The analysis revealed that the - Done outside Niger
analysis financial leverage ratio (LR), - Financial performan
long-term asset ratio (LAR), - Debt-to-assets ratio
and debt-to-assets ratio (DR) - Growth
exhibited a positive - Pharmaceutical
relationship with firm enterprises
performance. Conversely, self- - 2015 to 2019
financing (E/C) had a negative
impact on return on equity
(ROE). Based on these
findings, it was recommended
that the Vietnamese
government focuses on
stabilizing the macro
environment to create a
favourable business
environment. Pharmaceutical
enterprises were advised to
adopt a more balanced capital
structure with a higher
proportion of debt than equity,
diversify loan mobilization
channels such as issuing long-
term bonds, and expand their
scale appropriately to sustain
development and meet debt
obligations.
Purwanti (2020) Indonesia Multiple linear The results showed that - Done outside Niger
regression test simultaneous profitability, - Dividend policy
capital structure, company size, - Manufacturing
and dividend policy companies
significantly influence the - 2015 to 2018
value of manufacturing
companies. Partially,
profitability had a positive and
significant effect on firm value,
capital structure had a positive
and significant effect on firm
value, company size had a
 negative and significant effect
on firm value, and dividend
policy had positive and not
significant effect on firm value.
Sari and Sedana Indonesia Path analysis Profitability had a positive and - Done outside Niger
(2020) significant effect on capital - Profitability
structure, liquidity had a - Liquidity
negative and significant effect - Construction
on capital structure, capital building sub-sector
structure had a positive and - 2013-2017
significant effect on firm value,
profitability had a positive and
significant effect on firm value,
liquidity had a negative and not
significant effect on firm value
and capital structure was able
to mediate the effect of
profitability and liquidity on
firm value.
Sudiyatno et al. Indonesia Multiple Based on the Sobel test, - Done outside Niger
(2020) regression profitability played a role in - Profitability
mediating the effect of firm - Managerial ownersh
size on firm value. The effect - Manufacturing
of firm size on firm value was companies
indirect, however, through - 2016 to 2018
profitability. Therefore, the
market price of the shares of
large-scale companies would
increase if the resulting
profitability was high. The
capital structure and
managerial ownership directly
influenced firm value. The
results showed that managerial
ownership and firm size had a
positive effect on profitability,
while capital structure had no
effect on profitability. Capital
structure and managerial
ownership had a negative
effect on firm value, while firm
size and profitability had a
positive effect on firm value.
The main finding of this study
was that profitability acts as an
intervening variable in
 mediating the relationship
between firm size and firm
value.
Etale and Uzakah Nigeria Descriptive The findings indicated that the - Firm performance
(2019) statistics and debt-to-equity ratio had a - Debt to cap
multiple significant positive effect on employed ratio
regression return on capital employed, the - Equity to cap
techniques debt to capital employed ratio employed ratio
had a negative influence on - 2009 to 2018
return on capital employed,
and the equity to capital
employed ratio had no
significant influence on return
on capital employed. Overall,
the study concluded that capital
structure did not have a
significant effect on firm
performance at the 5% level.
The recommendations included
financing activities with
retained earnings and using
debt as the last option, in
alignment with the Pecking
Order theory. Additionally,
future researchers were
encouraged to analyse the
indirect effects of capital
structure on firm performance,
and company managers were
advised to be cautious in using
debt financing up to optimal
limits.
Ganiyu et al. Nigeria Two-step The primary findings revealed - Firm performance
(2019) generalized a statistically significant - Non-financial firms
method of relationship between capital
moments structure and firm
(GMM) performance, particularly when
estimation debt financing was employed
method moderately. However, the
paper identified evidence of a
non-monotonic relationship
between capital structure and
firm performance when
Nigerian firms excessively
utilized debt financing,
impacting negatively on their
 performance. These findings
supported the applicability of
the agency cost theory in the
Nigerian context, albeit with
caution, given the predominant
reliance on short-term debt
financing in Nigeria as
opposed to the long-term debt
financing assumed in the
agency cost theoretical
proposition.
Kerim, Alaji and Nigeria OLS multiple The results of the ordinary - Profitability
Innocent (2019) regression least square regression - Premium growth
technique indicated a negative and - 2013-2017
significant effect of short-term
debt on the profitability of
listed insurance firms in
Nigeria. Conversely, long-term
debt demonstrated a positive
and significant influence on
profitability, while premium
growth was found to have a
positive and significant effect
as well. Consequently, the
study recommended that the
management of these insurance
firms should aim for an
optimal capital structure,
emphasizing increased equity
levels and reduced reliance on
debts to avoid potential
financial constraints and
indebtedness.
Thao (2019) Vietnam Quantile The study revealed that - Done outside Niger
regression leverage had a positive impact - Firm value
method on firm value when it was low, - Non-financial
but the effect was opposite companies
when leverage was high. The - 2011 to 2017
findings indicated that low-
value firms could enhance their
value by increasing capital
through additional debt, while
high-value firms should
consider raising capital by
issuing more shares. This
insight contributed to a
 nuanced understanding of the
relationship between capital
structure and firm value,
providing valuable guidance
for companies in optimizing
their capital structures based on
their current valuation levels.
Udeh and Nigeria The study's findings indicated - Profitability
Ngwoke (2019) that short-term debt had a - Food and bever
significant and positive effect companies
on return on equity (ROE), - 2007 to 2016
serving as a measure of
corporate performance, among
other variables. The
implications suggested that
increased reliance on borrowed
funds could lead to interference
with the companies' ROE. The
study concluded that both short
and long-term debts had
significant and positive effects
on the financial performance of
food and beverage companies
in Nigeria. As a
recommendation, the study
suggested that companies
prioritize equity financing as a
first-line approach in their
business activities.
Usman (2019) Nigeria Regression The results, tested at a 0.05 - Financial performan
analysis (5%) level of significance, - Shareholders’ funds
indicated that short-term and - Consumer go
long-term debts had no industry
significant impact on the - 2012 to 2016
financial performance of listed
firms in the Nigerian consumer
goods industry. Conversely,
equity was found to have a
significant impact on the
financial performance of these
listed firms. The study
recommended that companies,
in determining their capital
structure, should carefully
consider and compare the costs
and benefits of obtaining a
 particular source of capital,
avoiding decisions based on
unfounded generalizations to
ensure positive outcomes in the
long run.
Vega Zavala and Mexico Employing The study verified the widely - Done outside Niger
Santillán Salgado Pooled acknowledged positive - Non-financial firms
(2019) Ordinary Least influence of leverage on firm - 2004 to 2014
Squares (OLS), value. In other words, there
Fixed Effects was a clear, positive, and
(FE), and statistically significant
Random relationship between changes
Effects (RE) in financial leverage
regressions (represented by debt ratios and
debt to invested capital) and
changes in Tobin’s Q, utilized
as a proxy variable for firm
value. The analysis further
revealed variations in the
magnitude of financial
leverage coefficients when the
sample was distributed into
sub-samples based on factors
such as leverage, size,
profitability, and risk. Notably,
these coefficients remained
highly significant, providing
valuable insights into the
impact of financial leverage
changes on the value of
different types of firms.
Uremadu and Nigeria Multiple The results revealed a negative - Corporate performa
Onyekachi (2018) regression and statistically insignificant - Long-term debt rati
impact of capital structure on total assets
the corporate performance of
consumer goods firms in
Nigeria. Specifically, long-
term debt ratio to total assets
and total debt ratio to equity
both exhibited negative and
insignificant impacts on returns
on assets. The study concluded
that capital structure does not
significantly determine firm
performance in this sector.
Consequently, the
 recommendations emphasized
caution for managers when
utilizing debt as a source of
finance, given the observed
negative impact on corporate
firms' performance. The study
also advocated for a preference
for financing activities with
retained earnings and
suggested debt as a last resort,
aligning with the pecking order
theory. Overall, the study
strongly recommended that
corporate firms prioritize
equity over debt in financing
their business activities,
acknowledging that while debt
capital can enhance business
value, it reaches a point where
it becomes detrimental or
unfavourable to the business.
Source: Author’s research (2024)
 CHAPTER THREE
METHODOLOGY

3.1 Research design

Ex-post facto research design was used in this study. Ex-post facto research, also known

as after-the-fact research, is a type of study in which the examination begins after the event has

occurred, without the intervention of the researcher. This study used an ex-post facto research

strategy because the data for the analysis has already transpired, leaving little or no room for the

researcher to manipulate it.

3.2 Population of the study

In this study, the population was made up of all insurance companies listed on the floor

of the Nigerian Exchange Group from 2013 to 2022. As of December 31 st, 2022, the total

number of insurance companies was twenty-two (22).

3.3 Sampling techniques

In a bid to derive homogeneous sample, the researcher adopted purposive sampling

technique to deselect Goldlink Insurance Plc., Staco Insurance Plc and Standard alliance Plc due

to incomplete financial reports. The first and the last one does not have published financial report

after 2019. After this deduction, the final sample was 19 insurance companies.
3.4 Source of data and method of data collection

In this study, secondary data source was employed which has been justified in studies of;

Nwafor, Yusuf, and Shuaibu (2022) and Ankomah et al. (2023). Secondary data was preferred

due to its reliability, acceptability, and availability. The data for the sampled listed insurance

firms were sourced from the Nigerian Exchange Group fact books and annual financial reports

for the periods covered in the study.

3.5 Method of data analysis

In examining the effect of financial structure on market value of listed insurance

companies in Nigeria, panel least square regression analysis was used in analysing the data and

E-views 10 was statistical package used to analyse the data of this study.

3.6 Model specification and variable measurement

The model for this study was adapted from the work of TemuhaleandIghoroje(2021) and

modified to suit our study. The econometric function of the model is given below:

Market value = f(Financial structure) Equation 1

Financial structure = f(AS, CS, DS) Equation 2

MPSit = α 0 + β 1ASit + β 2CSit + β 3DSit + β 4FSit + ε Equation 3

Where:

MPS = Market price per share

AS = Asset structure
CS = Capital structure
DS = Debt structure
FS = Firm size
α0 = Model intercept
β 1-4 = Coefficient to be estimated, where β 1-4> 0
it = Cross section of listed companies with time variant
ε = Stochastic error term

3.7 Operationalization of variables

Variable Measurement Sources

Market value Market price per share Collins, Filibusand Clement (2012)
(Dependent variable)
Asset structure Ratio of fixed or non-current TemuhaleandIghoroje(2021)
(Independent variable) assets to total assets
Capital structure Ratio of total equity to total Saleh, Priyawan and Ratnawati (2015);
(Independent variable) long term funds Collins, Filibus and Clement (2012)
Debt structure Ratio of long-term debt to Abuamsha and Shumali (2022);
(Independent variable) total debt Githaigo and Kabiru (2015)
Firm size (control Natural log of total assets ErgeneandKaradeniz (2021)
variable)
Source: Author’s compilation (2024)
 CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS

The data obtained from the annual reports are presented, analysed and interpreted in this

chapter. The research hypotheses were also tested in this chapter of the study and the discussion

of the findings presented.

4.1 Data Presentation

The data required for this study were; ratio of non-current assets to total assets, debt to

equity ratio, ratio of long-term liabilities to total liabilities, firm size and market price per share.

The data set were extracted from the annual reports of nineteen (19) listed insurance firms on the

Nigerian Stock Exchange. These data were used to compute the variables of the study. The

variables were financial structure (independent variables) and market value (dependent variable).

The financial structures were; asset structure (proxied by non-current assets divided by total

assets), capital structure (proxied by ratio of equity to total long-term funds), debt structure

(proxied by ratio of non-current liabilities to total liabilities) and market value (market price per

share). The data computed variables are presented in Appendix B.

4.1.1 Descriptive Statistics of the Variables

The descriptive statistics of the variables are presented in Table 4.1. The descriptive

statistics were mean, median, maximum, minimum and standard deviation.

Table 4.1 Descriptive statistics of the effect of financial structure on market value

MPS AS CS DS FS

Mean 0.667368 0.345741 0.771215 0.752311 16.77726

Median 0.470000 0.290272 0.771133 0.782681 16.67610
Maximum 4.500000 0.857760 3.604960 1.574856 19.31279
Minimum 0.100000 0.037666 -8.744399 0.111132 15.05912
Std. Dev. 0.802423 0.207363 1.937230 0.166199 0.840726
Skewness 2.875196 0.748536 -3.846630 -0.944819 0.519418
Kurtosis 11.48077 2.763767 10.18946 8.842021 3.165293

Jarque-Bera 831.1749 18.18485 49883.68 298.4579 8.759817

Probability 0.000000 0.000113 0.000000 0.000000 0.012527

Sum 126.8000 65.69081 146.5309 142.9391 3187.678

Sum Sq. Dev. 121.6937 8.126910 11906.93 5.220594 133.5891

Observations 190 190 190 190 190

Source: Author’s computation (2024)

Table 4.1 shows the descriptive statistics of the variables for this study. From the table,

the minimum total assets (firm size) of the firms under study between 2013-2022 was

N3,468,094,000 while the maximum was N244,028,140,000. The average total assets for the

sector was N28,849,459,000 and the standard deviation which shows the degree of dispersion

was N34,388,306,000. This analysis implies that the insurance sub-sector is well capitalized in

terms of assets.

Moreover, for market price per share (MPS), the lowest price a company in that sector

ever had was N0.10 while the highest during the study period was N4.50 per share. Average was

N0.67 and standard deviation was N0.80. This shows that the insurance sub-sector is

characterised by low share prices.

 Asset structure (AS) showed an average of 34.6%, a minimum of 4%, a maximum of

86% and a standard deviation of 21%. This statistic shows that insurance firms in Nigeria tend to

own more current assets in their asset combination than non-current assets.

For capital structure (CS), the industry average was 0.77, the highest was 3.60, the lowest

was -8.74 and the standard deviation was 1.94. These statistics show that the firms in the

insurance sub-sector have very high portion of equity in their total long-term funds.

Finally, the average debt structure (DS) was 75%, the lowest was 11% and the highest

was 157%. The standard deviation was 17% and these show that firms in the sector have less

long-term debts in their total debt structure or they have more of short-term debts.

4.1.2 Test of Regression Assumptions

4.1.2.1 Normality of residua

Regression models assume that the error terms are normally distributed. This particular

assumption needs to be met for the p-values of the t-tests to be valid (Chen, Ender, Mitchell and

Wells, 2003). According to Nau (2018), a violation of normality can distort confidence intervals

for forecasts and cause difficulties in determining the significance of model coefficients. A

violation of normally distributed error terms can signal the existence of unusual data points or

that the model can be improved. The general rule in this case is that a variable is normally

distributed if its probability value is significant at 1% or 5%, otherwise it is not.

The result from the normality test shows a Jarque-Bera statistic of 539.5421 and a

probability value of 0.000000 which indicate rejection of null hypothesis that the error terms are

normally distributed but instead the alternate hypothesis which states that the error terms do not

follow a normal distribution should be accepted; which means the error terms are not normally
distributed. Despite the absence of normality, the researcher would still proceed with the

Ordinary least square regression analysis but depending on the probability statistics against the t-

statistics for interpretation and policy recommendation as suggested by Gujarati (2004) as well

as Greene (2009). [Refer to the appendix A for the test output].

4.1.2.2 No autocorrelation
The least square regression model assumes that there is no autocorrelation or serial

correlation of the residuals in the model. To test this, the Durbin Watson statistics would be used

(Durbin & Watson, 1950). For this assumption to hold, the Durbin Watson statistics must be

somewhere between 1.5 and 2.5. Refer to the regression analysis table for this. The statistics

show that there is no autocorrelation in the residuals (1.665615).

4.1.2.3 No multicollinearity

The regression model also assumes the absence of multicollinearity between the

independent variables. It is a situation where one or more independent variable can be expressed

as a combination of other independent variables. This can be detected by observing the Variance

Inflation Factor (VIF). The VIF should be less than 10 for this assumption to hold. The

diagnostic is shown below.

Table 4.2 Variance inflation factor analysis for the independent variables

Coefficient Uncentered Centered

Variable Variance VIF VIF

C 16.87615 5410.436 NA
AS 0.106303 5.531599 1.457729
CS 0.020164 1.616445 1.585483
DS 0.169061 32.16505 1.489250
FS 11.02129 5296.878 1.631964

Source: Author’s computation (2024)

From table 4.2 above, all the independent variables have a centred VIF of below 10. This

interprets that there is no multicollinearity in the variables.

4.1.2.5 Homoscedasticity

This holds that error terms of the regression model should have a constant variance across

all levels of the independent variables (Smith, 2005). Homoscedasticity in E-views can be

assessed through the Breusch-Pagan Godfrey test for heteroskedasticity. The null hypothesis for

this test is there is no heterogeneity in the model and the alternate is that there is heterogeneity in

the model. The test is presented below.

Table 4.3 Heteroskedasticity Test: Breusch-Pagan-Godfrey

F-statistic 5.507235 Prob. F(4,185) 0.0003

Obs*R-squared 20.21697 Prob. Chi-Square(4) 0.0005
Scaled explained SS 84.06546 Prob. Chi-Square(4) 0.0000

Source: Author’s computation (2024)

From the result above, the Obs R-squared value (20.21697) has a p value of 0.0005.

Therefore, we reject the null hypothesis. This implies that there is heterogeneity in the model.

The result shows that the assumption of homoscedasticity of the pooled OLS regression has been
violated. Hence, the study proceeds to the fixed and random effects model testing to determine

which is suitable for the regression.

4.2 Data analyses

4.2.1 Correlation analysis

Correlation analysis tests for the association (correlation) between the independent

variables and the dependent variables of interest.

Table 4.4 Correlation analysis for the relationship between financial structures and market
value
MPS AS CS DS FS
MPS 1.000000
AS -0.202303 1.000000
CS 0.332950 -0.018124 1.000000
DS -0.031911 -0.372729 0.440195 1.000000
FS 0.475155 -0.424400 0.461058 0.386716 1.000000
Source: Author’s computation (2024)

From table 4.4 above, each of the variables had perfect correlation with themselves with

1.000000 as correlation coefficient. Reporting further, market price per share (MPS) and asset

structure (AS) showed a negative and weak correlation with -0.20 as coefficient. Positive but

weak association (0.33) also exist between market price per share (MPS) and capital structure

(CS). Debt structure (DS) with coefficient of -0.03 has no association with market price per share

(MPS). Finally, firm size (FS) which is the control variable for this study showed a moderate

positive association with MPS with coefficient of 0.48. However, to test our hypotheses a

regression results would be needed since correlation analysis does not capture cause-effect

relationship.

4.2.2 Regression analysis

4.2.2.1 Panel Fixed and Random Effect Regression
Earlier on, the variables of this study showed presence of heteroskedasticity.As noted by

AjiboladeandSankay (2013), the fixed-effects model which is often the main technique for

analysis of panel data does not account for heterogeneity in both the intercept and the slope. It

accounts for individual heterogeneity only in the intercept. On the other hand, the random-effects

model accounts for individual heterogeneity in both the intercept and the slope. In the light of the

foregoing, this study employs the panel fixed and random effect regression to control the

heterogeneity effect that is present in the model but for this not to be voluminous, the Hausman

test will be used to determine which technique is suitable for this study.

4.2.2.2 Hausman Test

To determine whether to use fixed effect regression or random effect regression for this

study. The null hypothesis is that random effect model is suitable for the study and the alternate

is that fixed effect model is suitable. The test is presented thus;

Table 4.5 Correlated Random Effects - Hausman Test

Test cross-section random effects

Chi-Sq.
Test Summary Statistic Chi-Sq. d.f. Prob.

Cross-section random 0.599555 4 0.9631

Source: Author’s computation (2024)

4.2.2.3 Random Effects Model (REM) regression

Table 4.6 Regression analysis for the effect of financial structures on market value

Variable Coefficient Std. Error t-Statistic Prob.

C -11.79077 4.867986 -2.422105 0.0164

AS -0.746229 0.373438 -1.998266 0.0472
CS -0.234833 0.137995 -2.001751 0.0305
DS -0.514374 0.281884 -1.824773 0.0964
FS 10.71337 3.952114 2.710795 0.0073

Effects Specification
S.D. Rho

Cross-section random 0.740779 0.7588

Idiosyncratic random 0.417657 0.2412

Weighted Statistics

R-squared 0.410658 Mean dependent var 0.116400

Adjusted R-squared 0.382084 S.D. dependent var 0.433130
S.E. of regression 0.413801 Sum squared resid 31.67777
F-statistic 11.51734 Durbin-Watson stat 1.665615
Prob(F-statistic) 0.000322

Source: Author’s computation (2024)

The random effect regression model above shows an F-statistic of 11.51734 with p-value

of 0.000322 indicating that overall, the random effect model is fit for statistical inference and

also that overall, the relationship between financial structures and market value is significant.

The model gave an R-squared value of 0.410658 which means that 41% of the changes in the

dependent variable can be explained by the independent variables of this study. However, the

unexplained part is captured in the error term.

4.3 Test of hypotheses

The regression results in table 4.6 is used to test the following hypotheses:

Hypothesis one
Ho1:Asset structure has no significant effect on the market price per share of insurance firms in

Nigeria

The results obtained from the random effects model revealed that asset structure (AS); -

0.746229[0.0472] has a significant effect on the market price per share of insurance companies

in Nigeria. With the coefficient and the p-value, the null hypothesis was rejected and the

alternate was accepted. The null hypothesis was further rejected because the t-calculated (-

1.998266) is greater than the critical value of t (1.9728).

Ho2:Capital structure has no significant effect on the market price per share of insurance firms in

Nigeria

From the regression result, capital structure (CS) shows a regression coefficient of -0.234833 and

a p-value of 0.0305. This implies its significant negative relationship with market price per share.

On this note, the null hypothesis is rejected and the alternate is accepted. T-cal value (-2.001751)

was also found to be greater than the critical t (1.9728) which also supports that the null

hypothesis should be rejected.

Ho3:Debt structure has no significant effect on the market price per share of insurance firms in

Nigeria

Results from the regression analysis also show that debt structure of insurance companies in

Nigeria has a negative and insignificant relationship with their market price per share. This is

evident as the coefficient was -0.514374 and a p-value of 0.0964 which is greater than the 0.05

significance level. Therefore, the null hypothesis is accepted that debt structure does not have a

significant effect on the market price per share of insurance companies in Nigeria.
4.4 Discussion of findings

Asset structure and market value

The results obtained from the random effects model revealed that asset structure (AS); -

0.746229[0.0472] has a significant positive effect on the market value of listed insurance

companies in Nigeria. This means that a percentage increase in non-current assets can

significantly cause a decline in the share price of the companies under study. In other words,

increase in current assets could increase in the market price per share of the companies under

study. This finding is in tandem with the finding of Okobo and Ikpor (2017) who found negative

relationship between fixed assets and financial performance. However, contrary findings exist in

Saleh, Priyawan and Ratnawati (2015); Nyamasege et al. (2014), ZhengSheng, Nuo and Zhi

(2013) who all found positive relationship between asset structure and growth, profitability, and

market value.

Capital structure and market value

The relationship between capital structure and market value yielded a negative and

significant result -0.234833[0.0305]. This means that having more proportion of equity in the

total long-term funds can significantly reduce the market value of the firms under study.In

Yasmin and Rashid (2019), negative relationship exists between capital structure and firm

performance. However, contrary findings can be found in Collins, Filibus and Clement (2012)

who found a positive relationship between capital structure and market value.

Debt structure and market value

 The statistics result for the effect of debt structure on market value showed a negative and

insignificant relationship -0.514374[0.0964]. This finding suggests that debt structure does not

have a significant effect on the market value of the companies under study. Put another way,

increase in long-term debt compared to short-term debt could decrease market price per share of

insurance companies in Nigeria but lacked sufficient evidence to back it. There was however,

sufficient evidence in Onoja&Ovayioza (2015), Yan (2013); Weill (2008); and Zeitun and Tian

(2007) who found a positive association between short-term debt and firms’ profitability. On the

contrary, Makanga (2015) revealed a negative but insignificant relationship between short-term

debt and corporate performance (return on assets).

Firm size and market value

The results obtained from the random effects model revealed that firm size (FS);

10.71337[0.0073] has a significant positive effect on the market value of listed insurance

companies in Nigeria. This means that the larger the size of the firm, the larger its market value

in terms of market price per share and vice versa.

 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of findings

The study investigated the effect of financial structures on market value of insurance

companies listed on the floor of the Nigerian Exchange Group from 2013 to 2022. The

independent variable of the study being financial structure was proxied by asset structure, capital

structure and debt structure while the dependent variable being market value was proxied by

market price per share. The major theories supporting this study are trade-off theory and

signalling theory. The results of empirical findings with respect to each objective of the study are

as follows:

1. The result showed an R-squared value of 0.410658 which means that 41% of the

variations in market value are accounted for by financial structures.

2. The result obtained from the random effect OLS regression revealed that asset structure

(coeff. = -0.746229[0.0472]) has a negative relationship with market value of listed

insurance companies in Nigeria when measured using MPS. This means that a percentage

increase in the ratio of non-current assets to total assets, could decrease the market price

per share of the companies in question.

3. The result obtained also revealed that capital structure (coeff. = -0.234833[0.0305]) has a

significant negative effect on the market value of listed industrial goods companies in

Nigeria. This implies that increase in the proportion of equity in the total long term funds

structure could lead to a decline in market value of the companies under study.

4. For debt structure, the results (coeff. = -0.514374[0.0964]) indicate that debt structure has

a negative but insignificant effect on the market value of listed insurance companies in
 Nigeria. This implies that increase in proportion of long-term debt to total debt could

cause a decrease in the market price per share of the companies under study; but lacked

strong evidence.

5.2 Conclusion

Based on the findings of this study, it was concluded that financial structures have

significant effect on market value of listed insurance companies in Nigeria. specifically, it was

concluded that asset structure has a significant negative effect on market value of the said

companies, capital structure has a significant negative effect on market value of listed insurance

companies in Nigeria, debt structure does not have a significant effect on market value of the

companies under study, and finally, firm size has a significant positive effect on market value of

listed insurance companies in Nigeria.

5.3 Recommendations

Based on the result of empirical findings the following recommendations were made for the

study;

1. Firms should make sure their assets are made up of more current assets than non-current

assets as more non-current assets was found to cause decline in market value.

2. Firms should make sure their capital structure is not made up of more equity than other

component. They should focus on striking a balance between all sources of finance

available; as more equity was found to harm market value (share price) in this study.

3. While the study indicates a negative but insignificant effect of debt structure on the

market value of listed insurance companies, it is important to monitor the proportion of

 long-term debt to total debt. Although the evidence lacks strength, companies should still

evaluate their debt structures regularly and be mindful of the potential impact on market

prices.

5.4 Contribution to knowledge

This study contributes to knowledge by providing evidence of the effect of financial structures

on market value of listed insurance companies in Nigeria. This study has also expanded the

literature on financial structure and market value.

5.5 Suggestion for other studies

As stated in the limitation of this study, this study looked at the effect of financial structures on

market value of listed insurance companies in Nigeria and these findings could not be

generalized to other sectors. So, future studies should focus on other sectors such as consumer

goods, oil and gas firms and industrial goods sector. Also, other studies should consider the

effect of specific financial structures used in this study on the market value of insurance or other

firms in Nigeria.
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 APPENDICES
APPENDIX A: Eviews 10 Results

60
Series: Standardized Residuals
50 Sample 2013 2022
Observations 190
40
Mean -3.70e-15
Median -0.196470
30
Maximum 3.561977
Minimum -1.204217
20
Std. Dev. 0.761644
Skewness 2.361476
10 Kurtosis 9.771931

0 Jarque-Bera 539.6421
-1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5
Probability 0.000000

MPS AS CS DS FS

Mean 0.667368 0.345741 0.771215 0.752311 16.77726

Median 0.470000 0.290272 0.771133 0.782681 16.67610
Maximum 4.500000 0.857760 28.60496 1.574856 19.31279
Minimum 0.100000 0.037666 -86.74439 0.111132 15.05912
Std. Dev. 0.802423 0.207363 7.937230 0.166199 0.840726
Skewness 2.875196 0.748536 -6.846630 -0.944819 0.519418
Kurtosis 11.48077 2.763767 81.18946 8.842021 3.165293

Jarque-Bera 831.1749 18.18485 49883.68 298.4579 8.759817

Probability 0.000000 0.000113 0.000000 0.000000 0.012527

Sum 126.8000 65.69081 146.5309 142.9391 3187.678

Sum Sq. Dev. 121.6937 8.126910 11906.93 5.220594 133.5891

Observations 190 190 190 190 190

Coefficient Uncentered Centered

Variable Variance VIF VIF

C 16.87615 5410.436 NA
AS 0.106303 5.531599 1.457729
CS 0.020164 1.616445 1.585483
DS 0.169061 32.16505 1.489250
FS 11.02129 5296.878 1.631964

Table 4.3 Heteroskedasticity Test: Breusch-Pagan-Godfrey

F-statistic 5.507235 Prob. F(4,185) 0.0003
Obs*R-squared 20.21697 Prob. Chi-Square(4) 0.0005
Scaled explained SS 84.06546 Prob. Chi-Square(4) 0.0000

MPS AS CS DS FS
MPS 1.000000
AS -0.202303 1.000000
CS 0.332950 -0.018124 1.000000
DS -0.031911 -0.372729 0.440195 1.000000
FS 0.475155 -0.424400 0.461058 0.386716 1.000000

Chi-Sq.
Test Summary Statistic Chi-Sq. d.f. Prob.

Cross-section random 0.599555 4 0.9631

Variable Coefficient Std. Error t-Statistic Prob.

C -11.79077 4.867986 -2.422105 0.0164

AS -0.746229 0.373438 -1.998266 0.0472
CS -0.234833 0.137995 -2.001751 0.0305
DS -0.514374 0.281884 -1.824773 0.0964
FS 10.71337 3.952114 2.710795 0.0073

Effects Specification
S.D. Rho

Cross-section random 0.740779 0.7588

Idiosyncratic random 0.417657 0.2412

Weighted Statistics

R-squared 0.410658 Mean dependent var 0.116400

Adjusted R-squared 0.382084 S.D. dependent var 0.433130
S.E. of regression 0.413801 Sum squared resid 31.67777
F-statistic 11.51734 Durbin-Watson stat 1.665615
Prob(F-statistic) 0.000322
APPENDIX B: DATASET EMPLOYED
COMPANY YEAR MPS AS CS DS FS
AFRICAN ALLIANCE INSURANCE PLC 2013 0.50 0.59 18.80 0.85 16.79
AFRICAN ALLIANCE INSURANCE PLC 2014 0.50 0.47 2.59 0.91 17.10
AFRICAN ALLIANCE INSURANCE PLC 2015 0.50 0.36 13.03 0.91 17.42
AFRICAN ALLIANCE INSURANCE PLC 2016 0.50 0.31 6.89 0.92 17.63
AFRICAN ALLIANCE INSURANCE PLC 2017 0.50 0.33 -6.74 0.94 17.60
AFRICAN ALLIANCE INSURANCE PLC 2018 0.20 0.35 -4.03 0.93 17.54
AFRICAN ALLIANCE INSURANCE PLC 2019 0.20 0.36 -4.53 0.95 17.50
AFRICAN ALLIANCE INSURANCE PLC 2020 0.20 0.23 -2.01 0.96 17.85
AFRICAN ALLIANCE INSURANCE PLC 2021 0.20 0.29 -8.16 0.94 17.54
AFRICAN ALLIANCE INSURANCE PLC 2022 0.20 0.29 -8.16 0.94 17.73
AIICO INSURANCE PLC 2013 0.25 0.17 2.98 0.90 17.56
AIICO INSURANCE PLC 2014 0.24 0.13 3.99 0.89 17.88
AIICO INSURANCE PLC 2015 0.27 0.10 7.25 0.93 18.20
AIICO INSURANCE PLC 2016 0.19 0.11 7.91 0.90 18.17
AIICO INSURANCE PLC 2017 0.15 0.09 7.43 0.90 18.34
AIICO INSURANCE PLC 2018 0.19 0.08 6.20 0.85 18.52
AIICO INSURANCE PLC 2019 0.21 0.09 4.21 1.57 18.72
AIICO INSURANCE PLC 2020 0.48 0.04 6.01 0.76 19.31
AIICO INSURANCE PLC 2021 0.70 0.06 4.07 0.95 19.04
AIICO INSURANCE PLC 2022 0.59 0.04 4.66 0.93 19.31
AXAMANSARD INSURANCE PLC 2013 2.86 0.31 1.42 0.81 17.40
AXAMANSARD INSURANCE PLC 2014 3.73 0.24 1.75 0.81 17.62
AXAMANSARD INSURANCE PLC 2015 3.14 0.26 1.61 0.86 17.75
AXAMANSARD INSURANCE PLC 2016 1.95 0.29 1.72 0.70 17.82
AXAMANSARD INSURANCE PLC 2017 2.25 0.27 1.80 0.72 18.01
AXAMANSARD INSURANCE PLC 2018 2.13 0.29 1.89 0.68 18.12
AXAMANSARD INSURANCE PLC 2019 2.31 0.22 2.07 0.65 18.34
AXAMANSARD INSURANCE PLC 2020 4.20 0.19 1.51 0.74 18.36
AXAMANSARD INSURANCE PLC 2021 2.32 0.18 2.03 0.73 18.46
AXAMANSARD INSURANCE PLC 2022 2.00 0.18 2.21 0.73 18.48
CONSOLIDATED HALLMARK INSURANCE PLC 2013 0.20 0.35 0.69 0.84 15.64
CONSOLIDATED HALLMARK INSURANCE PLC 2014 0.20 0.34 0.60 0.86 15.63
CONSOLIDATED HALLMARK INSURANCE PLC 2015 0.20 0.30 0.65 0.81 15.76
CONSOLIDATED HALLMARK INSURANCE PLC 2016 0.20 0.42 0.69 0.79 15.82
CONSOLIDATED HALLMARK INSURANCE PLC 2017 0.20 0.23 1.02 0.74 16.07
CONSOLIDATED HALLMARK INSURANCE PLC 2018 0.36 0.21 0.75 0.83 16.20
CONSOLIDATED HALLMARK INSURANCE PLC 2019 0.37 0.18 0.78 0.80 16.28
CONSOLIDATED HALLMARK INSURANCE PLC 2020 0.32 0.18 0.72 0.87 16.48
CONSOLIDATED HALLMARK INSURANCE PLC 2021 0.79 0.18 0.74 0.83 16.57
CONSOLIDATED HALLMARK INSURANCE PLC 2022 0.67 0.16 0.89 0.83 16.74
CORNERSTONE INSURANCE PLC 2013 0.45 0.17 1.05 0.80 16.47
CORNERSTONE INSURANCE PLC 2014 0.41 0.17 0.87 0.84 16.49
CORNERSTONE INSURANCE PLC 2015 0.41 0.20 0.74 0.82 16.86
CORNERSTONE INSURANCE PLC 2016 0.41 0.26 1.08 0.84 16.88
CORNERSTONE INSURANCE PLC 2017 0.41 0.25 2.29 0.82 17.00
CORNERSTONE INSURANCE PLC 2018 0.16 0.32 1.76 0.78 17.17
CORNERSTONE INSURANCE PLC 2019 0.36 0.12 1.36 0.75 17.38
CORNERSTONE INSURANCE PLC 2020 0.59 0.09 1.47 0.86 17.60
CORNERSTONE INSURANCE PLC 2021 0.46 0.07 1.41 0.81 17.71
CORNERSTONE INSURANCE PLC 2022 0.60 0.10 1.29 0.82 17.74
CORRONATION INSURANCE PLC 2013 1.08 0.28 0.57 0.54 16.92
CORRONATION INSURANCE PLC 2014 0.64 0.45 0.55 0.54 16.91
CORRONATION INSURANCE PLC 2015 0.50 0.54 0.58 0.67 16.98
CORRONATION INSURANCE PLC 2016 0.50 0.56 0.56 0.78 17.07
CORRONATION INSURANCE PLC 2017 0.50 0.47 0.59 0.77 17.17
CORRONATION INSURANCE PLC 2018 0.42 0.55 0.77 0.81 17.23
CORRONATION INSURANCE PLC 2019 0.34 0.49 0.66 0.81 17.24
CORRONATION INSURANCE PLC 2020 0.40 0.42 0.59 0.82 17.50
CORRONATION INSURANCE PLC 2021 0.56 0.57 0.84 0.81 17.50
CORRONATION INSURANCE PLC 2022 0.40 0.39 0.91 0.79 17.44
GUINEA INSURANCE PLC 2013 0.50 0.57 0.41 0.43 15.25
GUINEA INSURANCE PLC 2014 0.50 0.56 0.58 0.45 15.33
GUINEA INSURANCE PLC 2015 0.50 0.61 0.42 0.66 15.23
GUINEA INSURANCE PLC 2016 0.50 0.65 0.37 0.55 15.20
GUINEA INSURANCE PLC 2017 0.50 0.64 0.29 0.54 15.30
GUINEA INSURANCE PLC 2018 0.23 0.65 0.42 0.38 15.30
GUINEA INSURANCE PLC 2019 0.20 0.33 0.59 0.63 15.10
GUINEA INSURANCE PLC 2020 0.20 0.36 0.65 0.65 15.07
GUINEA INSURANCE PLC 2021 0.20 0.40 0.64 0.59 15.06
GUINEA INSURANCE PLC 2022 0.20 0.31 0.99 0.38 15.26
INTERNATIONAL ENERGY INSURANCE PLC 2013 0.54 0.50 8.60 0.81 16.13
INTERNATIONAL ENERGY INSURANCE PLC 2014 0.50 0.50 8.60 0.81 16.13
INTERNATIONAL ENERGY INSURANCE PLC 2015 0.50 0.55 -4.81 0.77 15.90
INTERNATIONAL ENERGY INSURANCE PLC 2016 0.50 0.72 -2.67 0.81 16.01
INTERNATIONAL ENERGY INSURANCE PLC 2017 0.50 0.72 -2.10 0.83 15.95
INTERNATIONAL ENERGY INSURANCE PLC 2018 0.50 0.82 -1.64 0.84 15.84
INTERNATIONAL ENERGY INSURANCE PLC 2019 0.38 0.85 -1.82 0.85 15.99
INTERNATIONAL ENERGY INSURANCE PLC 2020 0.38 0.86 -1.81 0.88 16.01
INTERNATIONAL ENERGY INSURANCE PLC 2021 0.38 0.84 -1.78 0.88 16.03
INTERNATIONAL ENERGY INSURANCE PLC 2022 0.38 0.58 -2.22 0.70 16.47
LASACO INSURANCE PLC 2013 2.00 0.28 1.28 0.81 16.41
LASACO INSURANCE PLC 2014 2.00 0.28 1.22 0.78 16.47
LASACO INSURANCE PLC 2015 2.00 0.25 1.45 0.60 16.60
LASACO INSURANCE PLC 2016 2.00 0.23 1.46 0.66 16.78
LASACO INSURANCE PLC 2017 2.00 0.25 1.28 0.56 16.74
LASACO INSURANCE PLC 2018 1.20 0.33 1.01 0.80 16.65
LASACO INSURANCE PLC 2019 1.00 0.33 1.26 0.73 16.73
LASACO INSURANCE PLC 2020 1.40 0.28 1.63 0.72 16.84
LASACO INSURANCE PLC 2021 1.05 0.26 1.12 0.73 16.99
LASACO INSURANCE PLC 2022 0.87 0.34 1.01 0.69 17.08
LINKAGE INSURANCE PLC 2013 0.29 0.08 0.15 0.71 16.69
LINKAGE INSURANCE PLC 2014 0.29 0.08 0.15 0.68 16.70
LINKAGE INSURANCE PLC 2015 0.29 0.08 0.20 0.72 16.79
LINKAGE INSURANCE PLC 2016 0.29 0.08 0.23 0.75 16.83
LINKAGE INSURANCE PLC 2017 0.38 0.08 0.17 0.73 16.96
LINKAGE INSURANCE PLC 2018 0.41 0.08 0.29 0.82 16.96
LINKAGE INSURANCE PLC 2019 0.30 0.06 0.25 0.82 17.17
LINKAGE INSURANCE PLC 2020 0.37 0.05 0.28 0.76 17.34
LINKAGE INSURANCE PLC 2021 0.51 0.06 0.54 0.86 17.47
LINKAGE INSURANCE PLC 2022 0.40 0.06 0.61 0.84 17.50
MUTUTAL BENEFITS ASSURANCE PLC 2013 0.50 0.39 3.37 0.34 16.49
MUTUTAL BENEFITS ASSURANCE PLC 2014 0.50 0.19 5.80 0.82 17.56
MUTUTAL BENEFITS ASSURANCE PLC 2015 0.50 0.29 5.11 0.89 17.65
MUTUTAL BENEFITS ASSURANCE PLC 2016 0.50 0.26 6.45 0.89 17.76
MUTUTAL BENEFITS ASSURANCE PLC 2017 0.50 0.23 6.10 0.88 17.87
MUTUTAL BENEFITS ASSURANCE PLC 2018 0.21 0.10 5.64 0.90 17.90
MUTUTAL BENEFITS ASSURANCE PLC 2019 0.20 0.16 3.96 0.88 18.03
MUTUTAL BENEFITS ASSURANCE PLC 2020 0.27 0.13 2.49 0.86 18.23
MUTUTAL BENEFITS ASSURANCE PLC 2021 0.33 0.13 3.47 0.88 18.24
MUTUTAL BENEFITS ASSURANCE PLC 2022 0.27 0.11 3.30 0.85 18.35
NEM INSURANCE PLC 2013 0.79 0.21 1.14 0.89 16.12
NEM INSURANCE PLC 2014 0.68 0.27 0.91 0.87 16.23
NEM INSURANCE PLC 2015 0.72 0.28 1.01 0.87 16.34
NEM INSURANCE PLC 2016 1.11 0.55 1.61 0.74 16.93
NEM INSURANCE PLC 2017 1.75 0.25 0.80 0.83 16.68
NEM INSURANCE PLC 2018 2.84 0.23 0.81 0.71 16.93
NEM INSURANCE PLC 2019 2.55 0.20 0.82 0.78 17.06
NEM INSURANCE PLC 2020 3.58 0.16 0.70 0.76 17.26
NEM INSURANCE PLC 2021 4.50 0.16 0.67 0.80 17.46
NEM INSURANCE PLC 2022 4.50 0.14 0.69 0.84 17.64
NIGER INSURANCE PLC 2013 0.50 0.70 2.03 0.77 17.02
NIGER INSURANCE PLC 2014 0.50 0.80 1.73 0.77 16.94
NIGER INSURANCE PLC 2015 0.50 0.80 1.42 0.72 16.86
NIGER INSURANCE PLC 2016 0.50 0.55 1.61 0.74 16.93
NIGER INSURANCE PLC 2017 0.50 0.54 1.91 0.76 16.94
NIGER INSURANCE PLC 2018 0.24 0.83 1.62 0.73 16.94
NIGER INSURANCE PLC 2019 0.20 0.80 4.47 0.76 16.97
NIGER INSURANCE PLC 2020 0.20 0.84 9.56 0.72 16.91
NIGER INSURANCE PLC 2021 0.20 0.81 -1.41 0.61 16.89
NIGER INSURANCE PLC 2022 0.20 0.81 -1.41 0.61 16.89
PRESTIGE ASSURANCE PLC 2013 0.34 0.28 1.30 0.77 16.13
PRESTIGE ASSURANCE PLC 2014 0.28 0.32 1.60 0.63 16.29
PRESTIGE ASSURANCE PLC 2015 0.28 0.39 0.73 0.78 16.15
PRESTIGE ASSURANCE PLC 2016 0.28 0.42 0.56 0.56 16.09
PRESTIGE ASSURANCE PLC 2017 0.28 0.36 0.57 0.64 16.28
PRESTIGE ASSURANCE PLC 2018 0.40 0.34 0.61 0.73 16.38
PRESTIGE ASSURANCE PLC 2019 0.44 0.35 0.56 0.75 16.39
PRESTIGE ASSURANCE PLC 2020 0.46 0.43 0.49 0.79 16.73
PRESTIGE ASSURANCE PLC 2021 0.51 0.22 0.66 0.83 16.89
PRESTIGE ASSURANCE PLC 2022 0.42 0.22 0.68 0.83 16.92
REGENCY ASSURANCE PLC 2013 0.50 0.27 0.56 0.76 15.64
REGENCY ASSURANCE PLC 2014 0.50 0.26 0.57 0.78 15.74
REGENCY ASSURANCE PLC 2015 0.50 0.24 0.57 0.79 15.80
REGENCY ASSURANCE PLC 2016 0.50 0.22 0.54 0.76 15.95
REGENCY ASSURANCE PLC 2017 0.50 0.21 0.63 0.76 16.05
REGENCY ASSURANCE PLC 2018 0.21 0.21 0.69 0.80 16.10
REGENCY ASSURANCE PLC 2019 0.20 0.18 0.87 0.75 16.15
REGENCY ASSURANCE PLC 2020 0.22 0.15 0.81 0.76 16.36
REGENCY ASSURANCE PLC 2021 0.51 0.15 0.77 0.84 16.29
REGENCY ASSURANCE PLC 2022 0.25 0.14 0.77 0.78 16.37
SOVEREIGN TRUST INSURANCE PLC 2013 0.50 0.26 1.48 0.88 15.97
SOVEREIGN TRUST INSURANCE PLC 2014 0.50 0.31 1.04 0.90 15.95
SOVEREIGN TRUST INSURANCE PLC 2015 0.50 0.30 0.84 0.84 16.04
SOVEREIGN TRUST INSURANCE PLC 2016 0.50 0.35 0.82 0.84 16.07
SOVEREIGN TRUST INSURANCE PLC 2017 0.50 0.28 0.98 0.77 16.20
SOVEREIGN TRUST INSURANCE PLC 2018 0.21 0.27 0.95 0.74 16.24
SOVEREIGN TRUST INSURANCE PLC 2019 0.20 0.20 0.72 0.79 16.41
SOVEREIGN TRUST INSURANCE PLC 2020 0.20 0.20 0.72 0.81 16.51
SOVEREIGN TRUST INSURANCE PLC 2021 0.30 0.18 0.71 0.84 16.61
SOVEREIGN TRUST INSURANCE PLC 2022 0.28 0.18 0.67 0.92 16.67
SUNU ASSURANCES PLC 2013 0.50 0.47 1.52 0.85 16.09
SUNU ASSURANCES PLC 2014 0.50 0.35 1.38 0.93 15.91
SUNU ASSURANCES PLC 2015 0.50 0.42 0.97 0.80 16.29
SUNU ASSURANCES PLC 2016 0.50 0.48 1.54 0.81 16.14
SUNU ASSURANCES PLC 2017 0.50 0.44 1.65 0.85 16.24
SUNU ASSURANCES PLC 2018 1.00 0.20 1.90 0.84 16.32
SUNU ASSURANCES PLC 2019 1.00 0.21 1.79 0.82 16.23
SUNU ASSURANCES PLC 2020 1.00 0.21 1.55 0.40 16.19
SUNU ASSURANCES PLC 2021 0.45 0.45 0.62 0.76 16.29
SUNU ASSURANCES PLC 2022 0.29 0.40 0.69 0.75 16.39
UNIVERSAL INSURANCE PLC 2013 0.50 0.61 0.28 0.11 16.41
UNIVERSAL INSURANCE PLC 2014 0.50 0.64 0.26 0.15 16.42
UNIVERSAL INSURANCE PLC 2015 0.50 0.58 0.27 0.17 16.43
UNIVERSAL INSURANCE PLC 2016 0.50 0.61 0.30 0.16 16.44
UNIVERSAL INSURANCE PLC 2017 0.50 0.61 0.33 0.23 16.44
UNIVERSAL INSURANCE PLC 2018 0.20 0.61 0.35 0.28 16.45
UNIVERSAL INSURANCE PLC 2019 0.20 0.76 0.20 0.65 16.21
UNIVERSAL INSURANCE PLC 2020 0.20 0.74 0.24 0.66 16.29
UNIVERSAL INSURANCE PLC 2021 0.20 0.68 0.23 0.67 16.33
UNIVERSAL INSURANCE PLC 2022 0.20 0.62 0.26 0.77 16.41
VERITAS KAPITAL INSURANCE PLC 2013 0.10 0.45 0.16 0.62 16.20
VERITAS KAPITAL INSURANCE PLC 2014 0.10 0.55 0.15 0.61 16.17
VERITAS KAPITAL INSURANCE PLC 2015 0.10 0.53 0.14 0.64 16.19
VERITAS KAPITAL INSURANCE PLC 2016 0.10 0.47 0.14 0.48 16.33
VERITAS KAPITAL INSURANCE PLC 2017 0.10 0.44 0.28 0.68 16.24
VERITAS KAPITAL INSURANCE PLC 2018 0.23 0.44 0.44 0.63 16.30
VERITAS KAPITAL INSURANCE PLC 2019 0.20 0.40 0.41 0.57 16.31
VERITAS KAPITAL INSURANCE PLC 2020 0.20 0.34 0.50 0.61 16.47
VERITAS KAPITAL INSURANCE PLC 2021 0.21 0.34 0.53 0.72 16.62
VERITAS KAPITAL INSURANCE PLC 2022 0.20 0.31 0.38 0.68 16.68
Source: Annual report of companies under study (2013-2022)