Research Article

MODERATING EFFECT OF FIRM SIZE ON THE RELATIONSHIP BETWEEN LONG-TERM DEBT AND FINANCIAL PERFORMANCE OF LISTED HOSPITALITY FIRMS IN NIGERIA

Yusuf Lukman1*, Maryam Abdu2, Rahilahtu Ahmad Muhammad3
1 Department ofBusiness Administration, Kaduna State University, Kaduna, Nigeria
2 Department of Business Administration and Entrepreneurship, Faculty of Management Sciences, Kaduna State University
3 Department of Business Administration, Kaduna State University, Kaduna, Nigeria
* Corresponding author: lukmanyusuf1081@gmail.com
Published: Jun, 2025
DOI: 10.68022/kbmr.2025.6zokccax
Pages: 135-146
Views: 12
Downloads: 1

Abstract

This study became imperative due to the low-level financial performance of hospitality firms. This is further buttressed by the fact that hospitality firms' contributions to GDP in Nigeria are low in comparison with 20%, 17% and 12% of hospitality and tourism contributions to GDP in Seychelles, Cape Verde and Mauritius respectively. This study therefore examined the moderating effect of firm size on the relationship between capital structure and financial performance of listed hospitality firms in Nigeria. Ex-post facto quantitative research design was employed in the study. Secondary data were collected and extracted from the Nigeria Exchange Group (NGX) fact books of listed hospitality firms for period ten (10) years (2014 to 2023) and through annual financial reports of listed hospitality firms. The collected data were analyzed using panel data regression analysis with the aid of STATA (Statistics/Data Analysis) 14.2. The findings revealed that long-term debt financing has significant negative effects on financial performance of listed hospitality firms. In line with these findings, this study recommended that the hospitality firms should reduce reliance on long-term debt financing, as it has been shown to significantly reduce financial performance. Alternative financing options such as equity or internal funds should be explored to avoid long-term financial strain. Policymakers and financial institutions should of ferflexible credit terms and innovative funding options tailored to the hospitality sector's unique dynamics to enhance its financial performance.

Keywords

capital structure financial performance firm size debt financing hospitality firms

References

  1. Abor, J. (2014). The effect of capital structure on profitability: an empirical analysis of listed firms in Ghana. The Journal of Risk Finance, 6(5): 438-445.
  2. Abosede, S. A. (2021). Impact of indebtedness on financial performance of quoted downstream oil and gas companies in Nigeria. International Journal of Academic Research in Accounting, Finance and Management Sciences, 10(4), Pages -21. https://doi.org/10.6007/IJARAFMS/v10-14/8450
  3. Akaji, 0., Nwadialor, E. 0. & Agubata, N. (2021). Effect of debt financing on firms' performance in Nigeria. Journal of Accounting and Financial Management, 7(3),
  4. Alarussi, A. S., & Alhaderi, S. M. (2018). Factors affecting profitability in Malaysia. Journal of Economic Studies, 45(3), 442-458.
  5. Anyike, L. L. & Agilebu, 0. M. (2019). Leverage and corporate financial distress in Nigeria: A panel data analysis. Asian Finance & Banking Review, 3(2),
  6. Ameer, R., & Othman, R. (2020). Sustainability practices and corporate financial performance: A study based on the top global corporations. Journal of Business Ethics, 106(3), 351-366.
  7. Aransiola, S. Y., Aransiola, 0. (2015). Capital structure and profitability: A critical analysis of quoted manufacturing companies in Nigeria. American Journal of Economics, Finance, and Management, 1(5)
  8. Ariani, N., Yuyetta, E. N. A., & Hardiningsih, P. (2020). The Support of Sharia Rural Banks Financing on National Financial Inclusion. International Journal of Islamic Business and Economics (JIBEC), 4(1), 40-50. https://doi.org/10.28918/ijibec.v4il.1980
  9. Asen A., Nwude, C. E., Idamoyibo, H. R., Ufodiama, C. N. & Udo, E.S. (2021). Effect of capital structure on firms' performance in Nigeria. Universal Journal of Accounting and Finance, 9(1),
  10. Barako, D. G. (2012). Determinants of voluntary disclosures in Kenyan Companies Annual Reports. African Journal of Business Management, 1(5), 113-128.
  11. Campello, M. (2006). Debt financing: Does it boost or hurt firm performance in product markets? Journal of Financial Economics, 82(1), 135-172. https://doi.org/10.1016/j.jfineco.2005.04.001
  12. Charles, U. D. & Kamaluga, A. (2017). Effect of debt financing on profitability of listed agricultural companies in Nigeria. The International Journal of Research Publications, 6(11),
  13. Chechet, I. & Olayiwola, A.B. (2014). Capital structure and profitability of Nigeria quoted firms. the agency cost theory perspective, American International Journal of Social Science, 3(1), 139-158.
  14. Chen, M. C., Cheng, S. J., & Hwang, Y. (2005). An empirical investigation of the relationship between intellectual capital and firms' market value and financial performance. Journal of intellectual capital, 6 (2), 159-176.
  15. Kusumo, A. A. R., & Digdowiseiso, K. (2023). Return on Assets in the Automotive Sub Sector Company: Working capital turnover, company size, current ratio, debt to equity ratio. akurasi: Jurnal Riset Akuntansi Dan Keuangan, 5(1), 51-62. https://doi.org/10.36407/akurasi.v5i1.812
  16. Modigliani, F., & Miller, M., (1963). Corporate income taxes and cost of capital: a correction. American Economic Review 53
  17. Nwude, E. C., & Anyalechi, K. C. (2018). Impact of Capital Structure on Performance of Commercial Banks in Nigeria. 8(2).
  18. Udisifan, M. T., Akeem, A. S., Bako, P. M. & Olalere, V. D. (2021). Capital structure and firm financial performance: Moderating effect of board financial literacy in Nigerian listed non- financial companies. Journal of Accounting Research, Organization and Economics, 4(1)
  19. Udobi, P. I., Gbajumo, M. A., Umoru, B., Babatunde, S. A. & Ilimezekhe, D. (2020). Capital structure and firm's profitability: Evidence from listed consumer goods sector in Nigeria. Journal of Accounting, Business and Finance Research, 9(2)
  20. Yazdanfar, D. & Ohman, P. (2015). Debt Financing and Firm Performance: an Empirical Study Based on Swedish data. The Journal of Risk Finance, 16 (1), 102-118.
How to Cite

Lukman, Y., Abdu, M., & Muhammad, R. A. (2025). MODERATING EFFECT OF FIRM SIZE ON THE RELATIONSHIP BETWEEN LONG-TERM DEBT AND FINANCIAL PERFORMANCE OF LISTED HOSPITALITY FIRMS IN NIGERIA. Kaduna Business and Management Reviews, 6(1), 135-146. https://doi.org/10.68022/kbmr.2025.6zokccax

Y. Lukman, M. Abdu, and R. A. Muhammad, "MODERATING EFFECT OF FIRM SIZE ON THE RELATIONSHIP BETWEEN LONG-TERM DEBT AND FINANCIAL PERFORMANCE OF LISTED HOSPITALITY FIRMS IN NIGERIA," Kaduna Business and Management Reviews, vol. 6, no. 1, pp. 135-146, June 2025. doi: 10.68022/kbmr.2025.6zokccax

Share this article:
Facebook X / Twitter LinkedIn
Download PDF View Full Text (PDF) Back to Articles