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Effect of Capital Structure Heterogeneity on Investing Cash Flow Sensitivity of Listed Consumer Goods Firms in Nigeria


Authors : Ugwuodo Ejikeme Jude; Enekwe Chinedu Innocent; Obasi John Ogbonnia

Volume/Issue : Volume 11 - 2026, Issue 5 - May

Google Scholar : https://tinyurl.com/ywxj3m7x

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DOI : https://doi.org/10.38124/ijisrt/26May1604

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Abstract : The study examines the effect of capital structure heterogeneity on the investing cash flow sensitivity (ICFS) of Listed consumer goods firms in Nigeria from 2015 to 2024 both years inclusive. The independent variable as capital structure heterogeneity proxies by debt-to-equity ratio (DER), short-term debt to total asset ratio (STDR), and long-term debt to total asset ratio (LTDR) with firm size as control variable while the dependent variable as investing cash flow sensitivity (ICFS). The secondary data and purposive sampling techniques were used for the study. The study was anchored on the Pecking Order Theory while E-views version 10 statistical software package was adopted. Panel regression analysis using EGLS was employed, with diagnostic tests ensuring robustness against multicollinearity, heteroskedasticity, and non-normality. The results show that Debt-equity ratio has a significant negative effect on investing cash flow sensitivity, indicating that higher leverage reduces reliance on internal cash flows for investment. The short-term debt to total asset ratio also exhibits a significant negative effect, suggesting liquidity pressures from short-term obligations constrain investment sensitivity. Finally, the long-term debt to total asset ratio shows a marginally negative effect but is not statistically significant. Firm size has no significant effect on investing cash flow sensitivity.

Keywords : Short-Term Debt, Long-Term Debt, Debt Ratio, Assets, Investment and Cash Flow.

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The study examines the effect of capital structure heterogeneity on the investing cash flow sensitivity (ICFS) of Listed consumer goods firms in Nigeria from 2015 to 2024 both years inclusive. The independent variable as capital structure heterogeneity proxies by debt-to-equity ratio (DER), short-term debt to total asset ratio (STDR), and long-term debt to total asset ratio (LTDR) with firm size as control variable while the dependent variable as investing cash flow sensitivity (ICFS). The secondary data and purposive sampling techniques were used for the study. The study was anchored on the Pecking Order Theory while E-views version 10 statistical software package was adopted. Panel regression analysis using EGLS was employed, with diagnostic tests ensuring robustness against multicollinearity, heteroskedasticity, and non-normality. The results show that Debt-equity ratio has a significant negative effect on investing cash flow sensitivity, indicating that higher leverage reduces reliance on internal cash flows for investment. The short-term debt to total asset ratio also exhibits a significant negative effect, suggesting liquidity pressures from short-term obligations constrain investment sensitivity. Finally, the long-term debt to total asset ratio shows a marginally negative effect but is not statistically significant. Firm size has no significant effect on investing cash flow sensitivity.

Keywords : Short-Term Debt, Long-Term Debt, Debt Ratio, Assets, Investment and Cash Flow.

Paper Submission Last Date
30 - June - 2026

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