Business, Management and Accounting
8 years ago

Study finds no causal link between business risk and capital structure

Accounting & taxation
Causality Test of Business Risk and Capital Structure in a Panel Data of Nigerian Listed Firms
Dauda Mohammed

Paper Summary

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The study tested the relationship between business risk and capital structure in Nigerian listed firms from 2000-2006. Using Granger Causality test, the researchers found that increases in business risk or total liabilities do not predict higher future values of both variables. This suggests that changes in capital structure and business risk in Nigeria are not directly linked in the short-to-medium term.