This study examined the effects of capital structure on the performance of selected quoted manufacturing firms in Nigeria from 2015 to 2024. Four models were specified to capture the influence of capital structure on the selected firms’ performance. Capital structure was proxied by equity (EQF) and total debt of firms (TDF) while firms’ performance, by returns on assets (ROA), earnings per share (EPS) and dividend per share (DPS). Data were sourced from the annual financial reports and balance sheets of the selected firms in various years. The Augmented Dickey Fuller (ADF) and Phillips Perron (PP) unit root tests were conducted to test for the stationarity of the series, while the Panel Ordinary Least Squares (POLS) estimation technique was adopted to test for the long run relationship of the series. The fixed and random effects estimation was also conducted while the Hausman test allowed us to select which model was more efficient for the analysis. The findings revealed that both equity and debt were positive but only debt was significant in explaining changes in returns on assets. Equity was negative while debt was positive but both were significant in explaining changes in earnings per share of the selected firms. Equity was negative while debt was positive but both were not statistically significant in explaining changes in dividend per share. The study recommended that an optimal mix of equity and debt financing will be appropriate for optimal utilization of assets and debt to leverage returns. Firms should embark on more holistic and strategic policies geared towards increased profitability and decreased number of outstanding shares at the same time. Equity and debt can be leverage to create value for shareholders through increased financial leveraging, tax benefits, cost of debts and equity financing.
Keywords: Capital Structure, Earnings per share, Returns on Assets, dividend per share, firms’ performance, market price per share, total debt of firms
