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The International Journal of Applied Economics and Finance

Year: 2013 | Volume: 7 | Issue: 1 | Page No.: 49-53
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Authors

A.O. Olowoniyi

J.O. Ojenike

Keywords

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Capital Structure and Stock Returns in Nigeria: A Panel Co-integration Approach

A.O. Olowoniyi and J.O. Ojenike
Capital structure and stock return play a significant role in the performance of firms. This study explored the relationship between capital structure and stock return of Nigeria-listed companies. Firm level panel data for this study were collected from 85 firms listed on the Nigeria stock exchange for the period 2000-2010. A panel co-integration approach was employed to examine the existence of long run relationship between the two variables. Results from Pedroni co-integration test indicate there is a long run relationship between capital structure and stock return; they will not drift away from each other. This finding suggest that, for financial stability to exist, attention needs to be paid to the two variables simultaneously since evidence suggest that the two variables will not wander away from each other.
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