Effect of Cost of Capital on Financial Performance of Listed Construction Industries in Nigeria

This research tends to evaluate the effect of cost of capital (cost of debt and cost of equity) on the financial performance of listed construction companies in the Nigerian Stock Exchange. The study entails four selected construction industries in Nigeria (Arbico Nigeria Plc, Julius Berger Nigeria Plc, Roads construction Nigeria Plc and UPDC), between the periods 2008 to 2017. The study uses descriptive statistics and Multiple Linear Regression to test the hypotheses. The regression analysis shows that Equation 2 (with ROE as dependent variable) is not fit, hence Equation was adopted for the test of hypotheses. The results reveal that cost of debt has insignificant negative effect on financial performance of the construction companies on one side. The study therefore suggested that companies should give more attention in obtaining financial equity capital rather than debt capital given that equity capital has positive effect on firms’ performance while debt capital has negative effect even though it is insignificant.