This study examined the relationship between capital structure choices and financial performance of listed service companies in Nigeria. Specifically, it assessed the associations of retained earnings, short-term liabilities, long-term liabilities, total liabilities and equity financing with Earnings per Share (EPS), controlling for firm size, profitability, asset turnover and liquidity. An ex-post facto design was adopted using balanced panel data from audited annual reports of 13 NGX-listed service companies over 2016–2025, yielding 130 firm-year observations. Data were analysed using descriptive statistics, Pearson correlation, Variance Inflation Factor (VIF), and panel diagnostic tests, including Breusch–Pagan LM, Hausman, Breusch–Pagan/Cook Weisberg, Wooldridge and Pesaran cross-sectional dependence tests. Two-way fixed effects models were estimated, with Driscoll–Kraay (DK) standard errors applied to address detected cross-sectional dependence. One-period lagged specifications were also estimated as a sensitivity test of temporal ordering. The findings indicate that retained earnings were positively and significantly associated with EPS across all contemporaneous specifications, whereas short-term liabilities, long-term debt and total liabilities were negatively and significantly associated with EPS. Equity financing was positively and significantly associated with EPS. The DK estimates preserved the signs and significance of the principal contemporaneous relationships, supporting their robustness to cross-sectional dependence. However, lagged results differed: lagged retained earnings became negative and significant, lagged long-term debt became positive and significant, while lagged total liabilities and equity were insignificant. The study concludes that financing composition matters for shareholder earnings, but the relationships are sensitive to temporal specification and should therefore be interpreted as conditional associations rather than definitive causal effects.

References

 Abdulwahab, U. M., Badara, M. S., Aliyu, I. A., & Abubakar, U. (2023). Capital structure choices in services companies: Empirical evidence from Nigerian listed firms. Journal of Economics and Sustainability, 5(2), 83–102. https://doi.org/10.32890/jes2023.5.2.5

 Abewardhana, D. K. Y., & Magoro, K. M. R. (2017). Debt capital and financial performance: A comparative analysis of South African and Sri Lankan listed companies. Asian Journal of Finance & Accounting, 9(2), 103–127.

 Abor, J. (2005). The effect of capital structure on profitability: An empirical analysis of listed firms in Ghana. The Journal of Risk Finance, 6(5), 438–445. https://doi.org/10.1108/15265940510633505

 Achieng, B. O., Muturi, W., & Wanjare, J. (2018). Effect of equity financing options on financial performance of non-financial firms listed at the Nairobi Securities Exchange. Applied Economics and Finance, 5(4), 1–14.

 Ahmad, S. M., Bakar, R., & Islam, A. (2020). The effect of debt financing on firm value: A panel data approach. Albukhary Social Business Journal, 1(2), 33–45.

 Ahmed, R., & Bhuyan, R. (2020). Capital structure and firm performance in Australian service sector firms: A panel data analysis. Journal of Risk and Financial Management, 13(9), 214. https://doi.org/10.3390/jrfm13090214

 Akinyomi, O. J. (2013). Effect of capital structure on firm performance: Evidence from Nigerian manufacturing companies. International Journal of Innovative Research and Studies, 2(9), 1–13.

 Aziz, S., & Abbas, U. (2019). Effect of debt financing on firm performance: Evidence from manufacturing firms. Journal of Finance and Economics, 7(1), 14–22.  Baltagi, B. H. (2021). Econometric analysis of panel data (6th ed.). Springer. https://doi.org/10.1007/978-3-030-53953-5

 Brealey, R. A., Myers, S. C., & Allen, F. (2020). Principles of corporate finance (13th ed.). McGraw Hill Education.

 Brigham, E. F., & Houston, J. F. (2021). Fundamentals of financial management (16th ed.). Cengage Learning.  Chakrabarti, A., & Chakrabarti, A. (2019). The capital structure puzzle: Evidence from Indian energy sector. International Journal of Energy Sector Management, 13(1), 2–23.

 Dalci, I. (2018). Impact of financial leverage on profitability of listed manufacturing firms in China. Pacific Accounting Review, 30(4), 410–432.

 Dave, V., Ashwin, P., Ashishi, P., & Tejas, P. (2019). Capital structure and profitability: Evidence from the Indian steel industry. International Journal of Financial Research, 10(2), 90–101.

 Ganiyu, Y. O., Adelopo, I., Rodionova, Y., & Samuel, O. L. (2019). Capital structure and firm performance in Nigeria. African Journal of Economic Review, 7(1), 31–56.

 Gharaibeh, A. M., & Bani-Khaled, A. A. (2020). Determinants of profitability in Jordanian service firms. Investment Management and Financial Innovations, 17(2), 180–190.

 Greene, W. H. (2020). Econometric analysis (8th ed.). Pearson.

 Helmy, A. E., Hassan, M. K., & Mohamad, S. (2020). Capital structure, corporate governance, and firm performance: Evidence from Malaysia. International Journal of Economics and Financial Issues, 10(3), 151–160.

 Huong, L. T., & Nhon, H. T. (2018). Capital structure and firm performance: Evidence from listed companies. Journal of Asian Finance, Economics and Business, 5(4), 45–56.

 Hussein, A., Alrabba, H., Muhannad, A., & Mashhoor, A. (2019). Capital structure and firm performance: Evidence from Jordanian listed companies. Academy of Accounting and Financial Studies Journal, 23(2), 1–15.

 Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304 405X(76)90026-X

 Kedzior, M., Grabinska, B., Grabinski, K., & Kedzior, D. (2020). Capital structure and liquidity: Evidence from European firms. European Research Studies Journal, 23(2), 393–408.

 Kraus, A., & Litzenberger, R. H. (1973). A state-preference model of optimal financial leverage. The Journal of Finance, 28(4), 911–922. https://doi.org/10.1111/j.1540-6261.1973.tb01415.x

 Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review, 48(3), 261–297.  Modigliani, F., & Miller, M. H. (1963). Corporate income taxes and the cost of capital: A correction. American Economic Review, 53(3), 433–443.

 Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221. https://doi.org/10.1016/0304-405X(84)90023-0

 Onaolapo, A. A., & Kajola, S. O. (2010). Capital structure and firm performance: Evidence from Nigeria. European Journal of Economics, Finance and Administrative Sciences, 25, 70–82.

 Onchong'a, B. O., Muturi, W., & Atambo, W. (2016). Effect of debt financing on financial performance of firms listed at the Nairobi Securities Exchange. International Journal of Economics, Commerce and Management, 4(7), 1120–1135.

 Rajan, R. G., & Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. The Journal of Finance, 50(5), 1421–1460. https://doi.org/10.1111/j.1540 6261.1995.tb05184.x

 Ross, S. A., Westerfield, R. W., Jordan, B. D., Lim, J., & Tan, R. (2022). Fundamentals of corporate finance (13th ed.). McGraw-Hill Education.

 Salawu, R. O. (2009). The effect of capital structure on profitability: An empirical analysis of listed firms in Nigeria. The International Journal of Business and Finance Research, 3(2), 121–129.

 Siddik, M. N. A., Kabiraj, S., & Joghee, S. (2017). Impacts of capital structure on performance of banks in a developing economy: Evidence from Bangladesh. International Journal of Financial Studies, 5(2), Article 13. https://doi.org/10.3390/ijfs5020013

 Sivalingam, L., & Kengatharan, L. (2018). Capital structure and financial performance: Evidence from commercial banks in Sri Lanka. Asian Economic and Financial Review, 8(11), 1405–1415.

 Vo, X. V., & Ellis, C. (2017). An empirical investigation of capital structure and firm value in Vietnam. Finance Research Letters, 22, 90–94.

 Waheed, A., Fawad, M., Shahid, M., & Ahmad, N. (2016). Capital structure and firm performance: Evidence from listed firms. Journal of Accounting and Finance in Emerging Economies, 2(2), 113 126.

 Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2020). Financial statement analysis (13th ed.). McGraw-Hill Education.

 Wooldridge, J. M. (2021). Introductory econometrics: A modern approach (7th ed.). Cengage Learning.