COMPARATIVE STUDY OF THE DETERMINANTS OF CAPITAL STRUCTURE OF QUOTED AND UNQUOTED AGRO-BASED FIRMS IN NIGERIA

The study examined the determinants of capital structure decision and compared the capital structure of quoted and unquoted agro-based firms in Nigeria. Data collected through a multi- stage random sampling from the financial statements of 28 quoted and 60 unquoted agro-based firms for the period 2005-2010 were analyzed using descriptive statistics, Z-test and Ordinary Least Square (OLS) regression. The result revealed significant differences in capital structure (long term debt and total debt use) between quoted and unquoted agro-based firms. Short-term debts constituted a higher proportion of total debts of both sampled groups. The regression result showed that firm size, asset structure andgrowth coefficients had significant positive relationships with both long and short term debt finance for both listed and unlisted agro-based firms respectively. Result further showed that age of firms, educational status of CEO, export status of firms, and gender of firm owners were positive and significantly related to long term debt for both listed and unlisted firms. Also, highly profitable firms depended on internally generated revenue, thereby lending credence to the pecking order theory (POT). Therefore, The study showed that pecking order theory dominated the financing behavior of agro-based firms in Nigeria while the agency cost argument was only relevant for listed agro-based firms. Hence, policies that would enhance the acquisition of tangible assets, encourage exportation, ensure appropriate record keeping and encourage the use of more long term finance in place of short-term finance should be pursued.