Title: Debt-Equity Financing and Institutional Quality of Boards of Public Felicia Ogheneotegiri Eyamu*,Listed Oil and Gas Firms in Nigeria
Authors: Efemena Otejiri OLIOGU, & Endurance Omovigho EYAMU
Volume: 8
Issue: 10
Pages: 67-76
Publication Date: 2024/10/28
Abstract:
The study examined debt-equity financing and institutional quality of boards of public listed oil and gas firms in Nigeria from 2013 to 2022. The dependent variable being institutional quality measured by board institutional quality index and the independent variable is debt-equity financing measured by Short-term debt-to-equity ratio (SDER), Long-term debt-to-equity ratio (LDER) and Total debt-to-equity ratio (TDER). Secondary data were obtained from annual report of selected oil and gas companies from 2012-2023. The result from the random effect regression showed that, TDER has a negative coefficient and is statistically significant. This means that, the more the targeted oil and gas firms seek for debts, the more inefficient they become. Secondly, LDER has a negative coefficient and is statistically significant. This means that, the more the target oil and gas firms seek for more long term debts, the more inefficient they become. However, short term debts seems to be highly beneficial to the board provided that, the size of the firm is controlled for. We recommend that for oil and gas firms to avoid becoming cash-strapped and debt-ridden, managers of oil and gas companies should work toward having an optimal capital structure by raising their equity level and decreasing reliance on debt. Also, management of Nigerian oil and gas companies ought to place more of an emphasis on short-term debt, which accounted for the majority of their leverage, and internal scheme development in order to enhance their board institutional quality.