Debt Financing and Post-Privatization Performance of Firms: The Case of Nigerian Listed Firms

This study examines the impact of debt financing on the performance of privatized-firms in Nigeria. The study uses a panel data obtained from the Nigerian Stock Exchange and Securities and Exchange Commission during the period 2002-2009. Our Ordinary Least Square (OLS) results suggest that corporate financing through debt tends to increase post-privatization performance of firms up to a given level, after which any addition to the proportion of debt in the capital (assets) of firms reduces their performance. The result also finds that the optimum debt financing to capital (assets) of privatized firms are 34.3%, 32.4% and 38.3%. Therefore, the study recommends among others the need for the firms to maintain optimum ratio of debt financing to capital of the privatized firms in Nigeria