Determinants of Capital Structure of Listed Agro Firms in

This paper examines the determinants of capital structure of agro-listed firms in Nigeria, using data generated from the financial statements of twenty eight (28) agro-allied firms, which have been listed in the Nigeria Stock Exchange (NSE) from 2005 to 2010. The major tool for data analysis was Ordinary Least Squares (OLS), which was used to analyze the identified firm-specific variables that affect short and long term debt ratios. All measured capital structure were scaled by the book value of total assets. In terms of short term debt ratio, large firms were perceived to have enough tangible assets at their disposal to pledge as collateral and access debt capital. Highly tangible firms also use more short-term debts, as high tangible asset reduced the magnitude of debt loss incurred by debt providers if the firms default. Growing listed firms used more short term debts, presumably due to their huge capital requirement for financing new short term investment opportunities and the need to meet current liabilities and other overhead expenses. Growing firms are presumed to lack both tangible assets and cheap long term credit sources of information and as such depends mostly on short term debts. The result further shows agro-listed firms with high taxes use more short term debts in their finances. Highly profitable firms do not depend on short-term debts, as they are perceived to be liquid enough to finance their short term investment through retained earnings at the expense of taking short term debts. In terms of long ter