The Sources of Finance and Financial Performance of Downstream Petroleum Firms in Nigeria
This study examined the various sources of finance employed by the downstream petroleum firms in Nigeria. It also determined the effect of long-term finance on profitability. Furthermore, it ascertained the impact of shortterm finance on profitability and found out the relationship between the medium-term finance and profitability in view of providing information of the significant effect of long-term and short-term finance on financial performance. The study employed secondary source of data. The technique of analysis was fixed-effect model through the panel data collected. The research design is quantitative. The targeted population consisted of 25 downstream petroleum firms in Nigeria from which a sample size of 20 firms was selected using a purposive sampling technique. Data were sourced on variables such as profit after tax; long-term source of finance, shortterm source of finance and medium-term source of finance from the audited financial statements of downstream petroleum firms. The data collected from the audited financial statements of the 20 firms covered 5 years between the periods of 2011-2015.The results of the study revealed that sources of finance as a whole significantly affected organizational performance in the downstream petroleum industry in Nigeria as F-statistic = 249.1042 with Prob. value = 0.0000. Also, it was found that the results of the study were in consonance with the theoretical apriori expectations. Moreso, the study revealed that long-term finance significantly affected profitability as the t-value of long-term finance was -5.644289 with its attendant Prob. value = 0.0000. Furthermore, it was found that shortterm finance significantly impacted on profitability as the t-value of short-term finance was 9.881206 with its attendant Prob. value = 0.0000. Moreover, the study revealed that there was direct relationship between the medium-term finance and profitability as the slope of coefficient was 0.178386. This indicated that 1% increase in medium-term finance would make the profitability to increase by 17.8%. The study concluded that in as much as sources of finance affected financial performance of downstream petroleum firms in Nigeria, the management and board of directors should pay attention to the utilization of these sources particularly short-term finance so as to avoid mismatch.