Financial Structure and Capital Intensity of Listed Industrial Goods Firms in Nigeria

Abstract

Financial structure remains a critical area in corporate finance, particularly for capitalintensive sectors such as industrial goods, where financing decisions influence investment patterns and operational efficiency. This study examined the effect of financial structure measured by retained earnings, revaluation reserves, and lease financing on capital intensity of listed industrial goods firms in Nigeria. The central problem addressed was the scarcity of empirical evidence on how specific components of financial structure affects capital intensity within the Nigerian industrial goods sector. The study adopted an ex-post facto research design, relying on secondary data extracted from the published annual reports of listed firms and the Nigerian Exchange Group for the period 2014–2023. The population comprised 13 listed industrial goods firms, from which 11 were purposively selected based on consistent listing during the study period. Data were analysed using panel least squares regression in STATA 17, with statistical decisions made at a 5 per cent significance level (p < 0.05). The results revealed that retained earnings had a significant positive effect on capital intensity, revaluation reserves showed a negative but insignificant effect, while lease financing exhibited a significant negative effect. The study concluded that the composition of a firm’s financial structure plays a crucial role in determining its capital intensity. It was recommended that firms should strategically utilise retained earnings while optimising lease financing and revaluation reserves to achieve sustainable investment capacity