LIQUIDITY AND CAPITAL STRUCTURE OF LISTED OIL AND GAS COMPANIES IN NIGERIA

Abstract

This paper examined the effect of liquidity on the capital structure of listed oil and gas companies in Nigeria for the period 2006-2016. The population of the study is ten (10) oil and gas companies listed on the Nigeria Stock Exchange (NSE) out of which eight (8) was used for the study. Linear regression technique using Ordinary Least Square (OLS) was used in analyzing the data obtained from the audited financial reports and accounts of the sampled companies. The findings revealed that liquidity has a positive and significant effect on the capital structure of listed oil and gas companies in Nigeria this finding is in line with the prediction of trade-off theory of debt financing. Based on the findings, this study recommends that listed oil and gas companies in Nigeria should remain liquid at all times by ensuring that their current liabilities do not exceed their current assets so that their financial obligations can be discharged on time.

Keywords

• Liquidity
• Capital Structure
• Deregulation
• Long-term Debt
• Short-term Debt