Ownership structure, financial leverage, and company performance; A study of companies on Nigeria Stock Exchange

This study analyzed the effect of ownership structure, financial leverage on company performance in Nigeria. In particular, the study examines the managerial ownership, institutional ownership, foreign ownership and the financial leverage on the performance of selected listed manufacturing companies in Nigeria using return on assets (ROA) as a proxy measure of performance. The agency theory was used as the major theory used to anchor the study, while the trade-off theory and pecking order theory provided supplementary explanations of the financing decisions of the firm and the capital structure. The study is on ex post facto research design as historical secondary data was used from published annual reports of five selected listed manufacturing companies during 2019-2025. The study employed panel data of 35 firm-years. The analysis has been carried out by descriptive statistics, correlation analysis, variance inflation factor, heteroskedasticity test, Augmented Dickey-Fuller (ADF) unit root test and pooled Ordinary Least Squares (OLS) regression analysis. Managerial ownership positively and statistically significantly impacted the performance of the firm and it was concluded that an increase in managerial ownership resulted in a positive increase in firm performance as it affected the interests of the manager and the owner in a better way. The negative relationship between financial leverage and performance implies that over-increasing debt financing has a negative and statistically significant effect on firm performance as it would increase financing costs and financial risk, which would negatively impact profitability. Institutional ownership and foreign ownership, on ROA, however, had positive but insignificant effects. Overall regression model was statistically significant and accounted for about 63.15% of the variations in the firm's performance. After studying it, it is concluded that managerial ownership improves financial performance, but the high financial leverage reduces profitability. Hence, the study suggests that manufacturing companies should encourage managerial equity participation, adopt optimal debt ratio, enhance the monitoring function of institutional investors, and foster good foreign investors participation in corporate governance. Keywords: Ownership, Structure, Return, Foreign, Firms, Nigeria.