Original Research Article

Determinants of capital structure in oil and gas sector in Nigeria

Emeh, Yadirichukwu¹* and Dr. Mrs. Okoli, Margaret²

¹Accountancy Department, Federal Polytechnic Nekede Owerri
²Department of Financial Management Technology, Federal University of Technology Owerri.

*Corresponding Author’s E-mail: diriolisa@yahoo.com

Accepted June 03, 2015

Abstract

Capital structure theory has been an attraction to many researchers across the global economy. Capital plays important role in any business and could rightly be seen as the life wire of every business. The growth of organization is dependent on the ability of the organization to meet up with the financing needs to fund the growth opportunities. Due to scarcity of available fund in the organization by way of the retained earnings, they are forced to source for funds externally. There are two major sources of external financing, the debt financing and equity financing. The optimal mix of the debt and equity in the capital structure has been an issue of interest for the maximization of shareholder wealth and increase in value of the firm. This study empirically investigates the factors that could be considered as determinants of capital structure in the oil and gas sector of firms listed in the Nigerian stock Exchange for the period 1990 to 2012. From the findings, recommendations were made in order to enhance growth in the firms through proper management of capital structure.

Keywords: Capital market, Capital structure, Debt, Equity, Optimal mix