EFFECT OF FIRM AGE ON THE CAPITAL STRUCTURE OF LISTED CONSUMER GOODS COMPANIES IN NIGERIA

Abstract
This study ascertained the effect of firm age on the capital structure of listed consumer goods companies in Nigeria. Specifically, the study aimed to determine the effect of firm age on the Debt-to-Equity ratio (DTER) and Debt to Assets Ratio (DTAR). A descriptive Ex-post facto research design was employed. 14 listed consumer goods companies were sampled for the study and data were obtained on: DTER and DTAR (dependent variables); Age (independent variable); and Size and Profit (control variables). Data were collected for 10 years, covering 2010 to 2019. Data were analysed using the Pooled Ordinary Least Squares (OLS) technique and the results revealed that firm age has a significant effect on DTER and DTAR of listed consumer goods companies in Nigeria. The study concluded that consumer goods companies still prefer debt financing to equity as they grow in age. The study recommends that managers of companies should continue to grow their assets to maintain good relationships with debt providers to keep them in a position where they can easily access capital from financial institutions.
Keywords: Age, Debt, equity, assets, capital

Introduction
Managers of firms worldwide are saddled with the responsibility of making both investment and financing decisions aimed at achieving the objective of their organisations which include minimizing costs to increase returns to shareholders in the course of satisfying consumers. In making these decisions, the manager is expected to select the best financing mix by taking into consideration the cost and benefits of each financing source. The major fund sources available to companies to finance their operations include equity, debt, and internal funds (retained earnings). Almost all companies combine equity and debt to make up their capital structure (Nassir 2016). The decision to go for either debt, equity, or a combination of debt and equity to an extent is a function of the experience (age) of the company in question.
The age of a company plays an important role in its capital composition (capital structure decision). Older firms tend to have more experience both in sourcing for debt and raising equity as well as in utilizing the funds that are gotten via those sources (short-term debts are committed to short-term projects and long-term debts are committed to long-term projects). Because of the foregoing, investors tend to commit their resources to companies that are older as compared to the companies that are just entering the industry or market. This may be attributed to the fact that older companies are likely to be more stable.
The stability of older companies attracts investors to acquire their shares whenever they make an offer. The willingness of investors to buy shares from older companies makes it easier for them to raise equity capital. On the other hand, creditors see the stability of older companies as one of the conditions for giving them funds in form of credit. It is therefore not out of place to say age influences capital structure. It is in consideration of the role age plays in sourcing funds to finance the operations of a company that this paper seeks to examine the effect of age on the capital structure of listed consumer goods companies in Nigeria. In specific terms the study seeks to:
i. Ascertain the effect of firm age on the debt-to-equity ratio of listed consumer goods companies in Nigeria
ii. Determine the effect of firm age on the debt to assets ratio of listed consumer goods companies in Nigeria.