The Nexus between capital structure choice and firm value: moderating role of CEO dominance

Abstract

In this research, the moderating effect on the CEO's dominance on the link between preferred capital structure as well as firm value is examined. The results show that all debt ratios (apart from immediate debt) demonstrate a statistically positive connection with company value based on 300 firm-year data in Nigeria from 2008 to 2017. Stata was employed to analyses data. We found that the capital structure's detrimental effects on business value are made worse by CEO domination. Our findings demonstrate how CEO impact critical organization results, such as capital structure choices. When CEO supremacy is taken into account, it is discovered that the association among capital structure and business value is statistically important. In general, the findings corroborate other studies that contend that a strong CEO domination tends to raise agency costs and, hence a consequence, has a negative impact on firm value. This has important implications for policy. Nigerian businesses may experience a considerable gain in worth if there is a change from the existing conservative usage of debt. In order to build business value, managers ought to focus upon coordinating their financial decisions with the requirements of other unforeseen circumstances, since any significant discrepancy could be harmful.