CAPITAL STRUCTURE DETERMINANTS OF ZOMBIE STATUS LISTED NON- FINANCE FIRMS IN NIGERIA

Abstract

This article explores capital structure determinants of Zombie firm status of the non-finance corporation registered with the Nigerian exchange group from 2013 - 2022. The capital structure proxies used for the study are Long term debt to asset and debt to equity ratios, while zombie status of the firm is captured as the regress. Also, the study captured profitability variables as the control variable. The study comprises as its population, all the non-finance corporations listed in the Nigerian exchange group from 2013 to 2022, 109 companies were listed according to the fact book of the Nigerian exchange group of 2022. The filtering method of sampling was utilized. This is justified on the strength that firms were added into the sample based on certain selection criteria. This study explored Logistic regression technique for hypotheses testing. The findings thus revealed that an increase of 1% in long term debt to asset ratio will result in about 1% insignificant increase in interest coverage ratio and thus resulting to decreasing zombie status of the firms during the period under consideration. The study therefor concludes that a 1% increase in debt- to-equity ratio will lead to about 1% significant decrease in interest coverage ratio and thus increasing zombie status of the firms during the period under investigation. The study thus suggests that should non-financial firms consider using debt in their capital structure, non-current debt should be given priority over short-term debt. This suggestion and recommendation is hinged on the strength of the finding that long term debt reduces the incidence of zombies among non- financial firms.