MODERATING EFFECT OF FIRM SIZE ON DEBT CAPITAL AND FINANCIAL PERFORMANCE OF LISTED AGRICULTURAL FIRMS IN NIGERIA

Abstract

This study examined the moderating effect of firm size on the relationship between debt capital and financial performance of Listed Agricultural Firms in Nigeria for the period of ten years (2013-2022). Short term Debt, Long Term debt and Total debt proxied debt capital while Return on Assets proxied financial performance. Firm size served as moderating variable. The study adopted ex-post facto research design and inferential statistics. Robust Fixed effect Models and Drisc/Kraay Standard Error were used in analysing the data. Primary findings revealed that short-term debt and long-term debt have negative significant effect on return on assets while total debt has positive significant effect on return on assets. However, the secondary findings have revealed that moderated-Short-term-debt has negative insignificant effect on return on assets while moderated-long-term-debt and moderated-total-debt have positive significant effect on return on assets. The moderation R-Squared was 0.9978 while the primary R-Squared was 0.3992. That means, firm size has moderated debt by 0.5986. In view of the findings, this study concludes that firm size has great moderating effect on debt capital. Therefore, this study recommends that investors should consider firm size as an effective variable in making investment decision. Secondly, management of companies should consider firm size in determining the debt to be collected, thirdly, manager should, consider firm size before moving their services to another company.