CAPITAL STRUCTURE AND FINANCIAL PERFORMANCE OF COMPANIES: THE MODERATING ROLE OF ENVIRONMENTAL DYNAMISM AMONGST LISTED NIGERIAN ICT FIRMS

Abstract

This study examined the moderating role played by environmental dynamism on the relationshipbetween leverage and profitability in the Nigerian Information and Communication Technology(ICT) sector. Seven out of the ten listed ICT companies on the Nigerian Stock Exchange were

analyzed. The study employed ex-post facto research design, using a data of 6 years period, between2010 and 2015. The study used Multiple Regression Model as the technique of analysis using STATA software version 13. The study revealed a negatively significant relationship between leverage and return on investment (ROI) but a positive moderating effect of environmental dynamism on their relationship. The study also revealed a positively significant relationship between leverage and return on equity (ROE) but a negative moderating effect of environmental dynamism on the relationship. The study concluded that environmental dynamism moderates the relationship between capital structure and financial performance of the ICTcompanies listed in Nigeria. The study therefore recommended that ICT companies should not blindly adopt leverage as a means of improving their financial performance without giving due consideration to the environment within which they operate.