Corporate Financing Options and Its Impact on Shareholders Value in Nigeria
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Abstract
This study examined corporate financing options on shareholder’s value in Nigeria for eleven (11) years spanning from 2007 to 2017. The study used time series data derived from the central bank of Nigeria (CBN) statistical bulletin (2017) an annual report of the banks under study. The independent variables are debenture, bonds, preference shares and ordinary shares which were proxied for corporate financing options. While the dependent variable is value added which was proxied for shareholder’s value. The value added for the purpose of this study represents the additional wealth which the bank has been able to create by its own and employee’s effort. Multiple regression model through E-views version 7.0 statistical software was applied to the study. The findings of the study revealed that debenture, bond, and ordinary shares have a positive relationship to value added of corporate firms while preference shares do not have a positive relationship to the value added of corporate firms. Furthermore, the findings revealed a direct relationship of those exogenous variables to the endogenous variable (value added). In addition, the result concluded that only bond and ordinary shares build a significant interest among other variables. The study concluded that a unidirectional causal relationship exists among debenture, bond, preference share and value added. This implies that debenture, bond, and preference shares have a short-run relationship with value added. Thus, the researcher recommended that the management of corporate entities in Nigeria should increase the use equity capital in financing to improve value added of their entities and investors should also consider the capital structure of any entity before investing in them as the strength of a firm capital mix determines the level of returns and value added
Keywords
Bond, Financing, Long term debt, Ordinary share, Preference share, Shareholders value
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