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Issues in Business Management and Economics
Vol.3 (10), pp. 120-132, November 2015
ISSN 2350-157X
Available online at
Article ID /BM/15/055/13 pages
Author(s) retain the copyright of this article. Author(s) agree that this article remain permanently open access under the terms of the Creative Commons Attribution License 4.0 International License.

Original Research Article

Effect of capital structure on retained earnings in the oil and gas sector – Evidence from Nigeria

1Akparhuere Godwin Oghenekohwo, 2Eze Nkeiruka Theresa and 3Unah Nnenna Alice

1Department of Business Administration and Management Federal School of Statistics, Enugu.
2Department of Accounts Enugu State University Teaching Hospital, Parklane, Enugu.
3Ministry of Finance and Economic Development Ebonyi State Nigeria.

Corresponding Author E-mail: oghenekohwoigho2015(at)
Tel.: +2348035500833

date Received: September 27, 2015     date Accepted: October 20, 2015     date Published: November 11, 2015


This study is an effort to answer the question on whether Retained Earnings is determined by capital structure in the oil and gas sector in Nigeria and the population of study is the Nigerian Oil and Gas industry. Data covering the period, 2002-2011, were gathered through secondary method and the study is descriptive. The analysis was carried out using simple statistical tools like Correlation Co-efficient (r), F-test (ANOVA), Co-efficient of Determination (R2), and Regression Analysis. The study revealed that Retained Earnings is strongly and positively determined by borrowing or debt; that Share Capital positively determines Retained Earnings; and that Retained Earnings had significant relationship with debt and share capital over the period of study. Among other things, the study recommends that debt or borrowing should be increased so as to increase retained earnings to be used for further investment or other purposes; that capital structure should be balanced so that more share capital or equity financing should be encouraged as opposed to debt financing in the oil and gas sector; and that future researchers, financiers and policy makers should emphasize more on how to balance debt and equity financing in the oil and gas sector in Nigeria.

Key words: Capital structure, debt financing, share capital, retained earnings.

Akparhuere et al