Long-term Debt and Firm Performance in the Non-Financial Sector in Nigeria: The Mediating Effect of Corporate Governance

Abstract

The study investigated the mediating effect of corporate 
governance on the relationship between long term debt and firm 
performance in the non financial sector in Nigeria, focusing on all 
quoted non-financial firms in Nigeria from 2019-2023 using ex-post 
facto research design. The variables used were long term debt(LTD) 
for capital structure and return on assets(ROA) for firm 
performance. Regression analysis, using random effects model, as 
determined by hausman specification test performed, was used for 
data analysis using Eviews 13. Findings were that, there exists a 
negative and insignificant effect of long term debt on return on 
assets. However on mediation with corporate governance, long 
term debt became positively and significantly related to return on 
assets. Based on the results, the study recommended, among others 
that, Shareholders, board of directors and mangers should ensure 
that corporate governance best practices are incorporated in their 
firms and operations. Government and regulatory agencies should 
put in place stringent laws to compel firms to embrace corporate 
governance, defaulting firms should be sanctioned appropriately.