Equity Financing and Value of Listed Information and Communication Technology (ICT) Firms in Nigeria

Abstract

This study examined the effect of equity financing on the firm value of listed Information and Communication Technology (ICT) firms in Nigeria, with firm value proxied by Tobin’s Q and equity financing proxied by the equity-to-asset ratio (ETA). An ex-post facto research design was adopted, using historical financial data from 2015 to 2024. The population consisted of all eight ICT firms listed on the Nigerian Exchange Group (NGX), while five firms that have been listed as at 2015 were purposively sampled. Secondary data were collected from the audited annual reports of the sampled firms, and hypotheses were tested using Panel Least Squares regression with White cross-section standard errors to correct for heteroskedasticity. The finding revealed that equity financing has a significant negative effect on the firm value of listed ICT firms in Nigeria (β = -0.623239, p = 0.0000). Therefore, market participants may perceive higher reliance on equity as a signal of potential dilution of ownership or a sign that internal resources and retained earnings are insufficient to fund growth, which could reduce investor confidence and market valuation. It was recommended that management of listed ICT firms should carefully evaluate the proportion of financing obtained through equity relative to other sources. They should consider balancing equity with retained earnings or internally generated funds to minimize potential market concerns about ownership dilution and avoid reducing firm value.