EFFECT OF CORPORATE FINANCING DECISION ON SHAREHOLDERS’ WEALTH: A STUDY OF NEIMETH PHARMACEUTICAL PLC

Abstract This study examines the effect of corporate financing decisions on shareholders’ wealth, using Neimeth Pharmaceutical PLC as a case study. The objective is to assess how capital structure choices (leverage composition), dividend policy, and equity financing activities influence firm value and shareholder returns. The study employs secondary data drawn from Neimeth’s published financial statements and market data, and applies descriptive statistics, correlation analysis, and multiple regression techniques to test the relationships between financing variables (debt-to-equity ratio, short- and long-term debt proportions, dividend payout ratio, and new share issues) and proxies for shareholders’ wealth (Tobin’s Q and earnings per share). Results indicate that financing decisions significantly affect shareholder wealth: dividend policy and equity financing are positively associated with firm valuation and shareholder returns, while higher levels of leverage—particularly short-term debt—tend to exert downward pressure on firm value. The findings suggest that prudent financing mix and a consistent dividend strategy can enhance shareholder wealth, whereas excessive reliance on debt can erode it. Policy implications include adopting an optimal capital structure that balances growth financing needs with shareholder interests, and maintaining transparent dividend policies to strengthen investor confidence. The study contributes to corporate finance literature by providing empirical evidence from the Nigerian pharmaceutical sector and offers practical guidance for firm managers and investors. Keywords: corporate financing decisions, capital structure, dividend policy, shareholders’ wealth, Tobin’s Q, Neimeth Pharmaceutical PLC.