This study evaluated the variation in capital structure strategies among firms of different sizes within the sector. Capital structure decisions, particularly the mix of debt and equity financing, play a critical role in determining firms’ financial performance, risk exposure, and long-term sustainability. However, firm size is widely recognized as a key factor influencing access to finance, cost of capital, and financing preferences. The study adopts a quantitative research approach, using secondary financial data from selected firms in the sector over a specified period. Firms are categorized into small, medium, and large-scale enterprises based on asset size and revenue. Descriptive statistics and econometric techniques are employed to analyze differences in leverage ratios, debt maturity structure, and equity utilization across firm sizes. Findings reveal significant variation in capital structure strategies across firm sizes. Large firms exhibit higher leverage levels and greater reliance on long-term debt due to easier access to capital markets and lower borrowing costs. Medium-sized firms demonstrate a balanced financing approach, combining internal funds with moderate external borrowing, while small firms rely predominantly on equity and short-term debt, constrained by limited access to formal credit markets. The study concludes that firm size significantly influences capital structure choices within the sector. It recommends that policymakers and financial institutions develop size-specific financing frameworks to enhance optimal capital structure decisions and improve financial sustainability across firms.
Ezuma et al. (Mon,) studied this question.