Effect of Corporate Growth Indicators on the Financing Decision of Transportation and Logistics Firms in Nigeria

Abstract

The study examined the effect of corporate growth indicators on the financing decision of transport and logistics firms in Nigeria. Total asset, earnings per share, and turnover were the corporate growth indicators used for the study, while debt-equity ratio was the dependent variable of the study. The study adopted an ex-post-facto research design, covering the period between 2012 and 2018. Secondary data were extracted from the annual reports and accounts of the sampled transport and logistics firms in Nigeria. Multiple regression analysis was used for the panel data analysis. In line with the specific objectives of the study which is to ascertain the effect of total asset, earnings per share, and turnover on debt-equity ratio of transport and logistics firms in Nigeria, it was revealed that total asset negatively and insignificantly affect financing decision of transport and logistics firms in Nigeria. Earnings per share and turnover have a positive and significant effect on financing decision of transport and logistics firms in Nigeria. Since additional asset increases profit and the use of retained earnings, transportation and logistics firms are encouraged to identify and work on means to increase their total assets since it reduces their debt-equity ratio. They should always strive to improve their profitability because of the positive effect on debt-equity ratio. They should strive to increase their quotation price on the Nigeria Stock Exchange in spite of the negative effect it will have on their debt-equity ratio. They should strive to increase their turnover so as to increase their profit and growth potentials which will enable them to make investment in a sector severely hit by Covid-19 pandemic.