This paper examines the determinants of capital structure of agro-listed firms in Nigeria, using data
generated from the financial statements of twenty eight (28) agro-allied firms, which have been listed
in the Nigeria Stock Exchange (NSE) from 2005 to 2010. The major tool for data analysis was
Ordinary Least Squares (OLS), which was used to analyze the identified firm-specific variables that
affect short and long term debt ratios. All measured capital structure were scaled by the book value
of total assets. In terms of short term debt ratio, large firms were perceived to have enough tangible
assets at their disposal to pledge as collateral and access debt capital. Highly tangible firms also use
more short-term debts, as high tangible asset reduced the magnitude of debt loss incurred by debt
providers if the firms default. Growing listed firms used more short term debts, presumably due to
their huge capital requirement for financing new short term investment opportunities and the need to
meet current liabilities and other overhead expenses. Growing firms are presumed to lack both
tangible assets and cheap long term credit sources of information and as such depends mostly on
short term debts. The result further shows agro-listed firms with high taxes use more short term
debts in their finances. Highly profitable firms do not depend on short-term debts, as they are
perceived to be liquid enough to finance their short term investment through retained earnings at the
expense of taking short term debts. In terms of long term debt ratio, highly profitable firms use less
long term debts, implying that they have enough internally generated funds for their financing needs
at the expense of borrowing. Large sized firms depend on long term debt for their finances because of
high tangible assets at their disposal as collaterals. Firm age was positively related to long term debt
ratio. The estimated growth coefficient was positively and significant, implying that growing firms
use more long term debts. Finally, asset structure was found to be positively related to long-term
debt ratio. Firms with high tangible assets are perceived to use more long term debts. It is recommended
among others that appropriate protectionist policy be put in place for agro-based listed firms
seeking short-term financing