MODERATING EFFECT OF BOARD INDEPENDENCE ON THE RELATIONSHIP BETWEEN CAPITAL STRUCTURE AND PROFITABILITY OF LISTED INDUSRIAL GOODS COMPANIES IN NIGERIA  |  Journal of Economics and Trade

Due to the lack of consensus on the relationship between capital structure and profitability around the world, a moderating component must be considered to strengthen the association. As a result, this study uses board independence as a moderator to look at how it affects the relationship between capital structure and profitability in Nigerian listed industrial goods businesses from 2006 to 2018. The study’s population consists of all twenty-one (21) industrial products companies registered on the Nigerian Stock Exchange (NSE) as of December 2018. The sample for the study is made up of ten (10) companies. The study used recorded data from the sampled companies’ annual reports and accounts. The data was first analysed using descriptive statistics to get summary statistics for the variables. Following that, a correlation study was performed utilising the Pearson correlation approach to determine the correlation between the dependent and independent variables, as well as the OLS regression technique. The findings revealed that debt to equity ratio, a capital structure proxy, has a significant positive impact on profitability, whereas board independence has a significant negative impact on the relationship between capital structure and profitability of listed industrial goods companies in Nigeria. Based on these findings, the study recommends that policymakers and management of industrial goods companies determine the optimal capital structure while also adhering to the code of corporate governance to ensure a perfect mix of board independence, as some companies do not adhere to the 50 percent mix of executive and non-executive directors in the governing board.

Please see the link :- https://www.ikprress.org/index.php/JET/article/view/5764

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