Examining the Influence of Financial Report Quality on Shaping the Capital Structure Decision Process of Brewery Companies in Nigeria

Abstract

This study investigated how financial report quality shapes the capital structure decision-making in listed brewery companies, focusing on Nigeria. The research analyzed secondary data from the annual reports of six selected breweries between 2012 and 2023, resulting in a total of sixty observations. Using an ex post facto research approach, the study applied descriptive statistics and panel regression methods comprising fixed effects, and pooled least squares and after the selection tests, the research eventually considered Pooled Ordinary Least Squares the best data estimator. The results revealed that asset tangibility, high debt performance, and capital adequacy significantly influence the capital mix decisions in these companies. The research also highlighted that asset tangibility strengthens their asset base. The study concluded that the quality of financial reports, as indicated by key financial indicators like capital adequacy, debt performance, and tangible asset investment, plays a crucial role in shaping capital structure strategies. The study further suggested diverse financing options and effective asset and risk management for brewery firms to minimize risks associated with high leverage.