Thin Capitalization and Financial Performance of Listed Consumer Goods Companies in Nigeria

The study examined the relationship between thin capitalization and financial performance of listed consumer goods companies in Nigeria. The population of the study consists of twenty one quoted consumer goods manufacturing companies in Nigeria. Census sampling was adopted in this study because all the 21 firms in the consumer goods manufacturing sub-sector were used for the study. Secondary data were obtained from the audited annual financial reports of quoted consumer goods manufacturing companies in Nigeria from 2014-2023. Hypotheses formulated were tested using panel least square regression through pooled, fixed effects, and random effect determined by the Hausman test, fixed effect regression was preferred for result interpretation with the aid of E-views 10 econometric statistical software. Findings showed that thin capitalization has significant effect on Tobin’s Q and Net Present Margin of quoted manufacturing companies in Nigeria. The study concludes that thin capitalization has significant effect on financial performance of quoted manufacturing companies in Nigeria. The study recommends among others that since thin Capitalization positively influences Tobin’s Q, companies might continue leveraging on debt while carefully managing the associated risk.