Capital Structure and Financial Returns: Longitudinal Panel Evidence from NReits

Abstract

The study is an investigation of the nexus between capital structure and financial returns. The investigation was conducted on a panel data of all real estate investment trusts in Nigeria (N-REITs) listed in the Nigerian Stock Exchange during 2009 to 2020. The independent variable was capital structure indicators of short-term debt, long-term debt and total debt. The dependent variable was proxied using 3 accounting measures of return on asset, return on equity and earnings per share. Data was sourced from secondary sources, specifically from the annual records and financial statements of N-REITs for the period. Upon data analysis with regression, the study found that capital structure had an insignificant relationship with the financial returns of N-REITs. However, for Sky Shelter Fund REIT, the result was contrary due to its statistically significant positive relationship between capital structure and returns. The findings of the study on the means, median and standard deviation of NREIT capital structures shows a compliance with the pecking-order hypothesis of firm financing.