Title: Financing Options On The Performance Of Listed Oil And Gas Firms In Nigeria
Authors: ADIEVUGHWARE, Ochuko Favour And EHIEDU, Victor C Ph.D
Volume: 9
Issue: 6
Pages: 14-28
Publication Date: 2025/06/28
Abstract:
This study investigates the impact of financing options on the performance of listed oil and gas firms in Nigeria, focusing on the period from 2015 to 2024. The research employs an ex-post facto design and panel data methodology to explore the influence of Equity Financing Ratio (EFR), Debt-to-Equity Ratio (DER), Short-Term Debt Ratio (STDR), and Long-Term Debt Ratio (LTDR) on firm performance, proxied by Return on Equity (ROE). A purposive sampling technique was used to select eight (8) firms with complete and consistent financial data. Data were sourced from audited annual reports and analyzed using panel least squares regression in E-Views 9.0. Fixed and random effects models were estimated, and the Hausman test confirmed the appropriateness of the fixed effects model. The results reveal that EFR and STDR have significant negative impacts on ROE, suggesting that high equity or short-term debt levels diminish firm performance. Conversely, LTDR shows a strong positive and statistically significant relationship with ROE, indicating that long-term debt financing, when well-managed, enhances profitability. DER, though positively signed, was not statistically significant, implying that the overall leverage mix may be less influential than the specific type and maturity of financing. The study concludes that capital structure decisions must be strategically balanced to optimize performance, particularly in capital-intensive sectors like oil and gas. It recommends that firms reduce over-reliance on equity and short-term debt while leveraging long-term debt for sustainable value creation. This study contributes to the growing body of capital structure literature in developing economies by offering sector-specific insights and reinforcing the practical implications of capital structure theories. It also provides a basis for future research into the role of firm-specific and external factors in moderating the debt-performance relationship.