Moderating Effect of Agency Costs on the Relationship Between Capital Structure and Sustainability Reporting of Listed Manufacturing Firms in Nigeria

2026-01-29T00:48:02+00:00

The correlation between sustainability reporting and capital structure has been a major issue of discussion in international literature of corporate finance and corporate social responsibility. The decisions of firms in capital structure in the country are complicated by weak governance, high agency costs and economic instability in Nigeria which, consequently, can influence the reporting of sustainability. In this study, the moderating role of agency costs to the relationship between the capital structure and sustainability reporting of listed manufacturing companies in Nigeria is investigated. Under the ex post facto-based research design, secondary data were collected on 10 manufacturing companies based in Nigeria listed on the Nigerian Exchange Group (NGX) between 2015 and 2024, and the secondary data were analyzed with the help of the fixed-effects regression. The findings indicate that long-term Debt, short-term Debt, and common stock have positive impacts on the Q of Tobin and this means that the capital structure elements are helping to provide improved sustainability reporting. This paper also finds that audit fee level has important moderating effect on the relationship between capital structure and the Q of Tobin whereby increased audit fee level strengthens the positive impacts of long-term Debt and common stock on sustainability reporting. The findings based on these are that the study recommends that companies should optimize the capital structure by balancing Debt and equity, improve the governance practices and invest in the quality of the audits in order to lower the agency costs, and enhance sustainability reporting. Policymakers are advised to assist in the stabilization of financial markets and the increased access to long-term financing of companies.

INTERNATIONAL JOURNAL OF CAPACITY BUILDING IN EDUCATION AND MANAGEMENT

Moderating Effect of Agency Costs on the Relationship Between Capital Structure and Sustainability Reporting of Listed Manufacturing Firms in Nigeria