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This research paper evaluated the effect of capital structure on the shareholders' value of commercial banks in Nigeria. Data for the study was collected from the annual financial statement of ten (10) commercial banks for a period of nine (9) years spanning 2009 to 2017. The Panel least square regression method was utilized as the method of data analyses. From the results recorded, it was shown that there is a negative and non-significant relation between leverage ratio and the earnings per share of commercial banks in Nigeria. The findings also showed that there is a positive but non-significant relationship between leverage ratio and the dividend payout. From the findings, it it concluded that gearing  has a negative effect on the shareholders value of commercial banks in Nigeria. This manifests in reduced profitability which by extension leads to reduction in earnings to shareholders. However, this may not lead to reduction in dividend payout to shareholders as new debt financing will likely mean that more of the earnings will be distributed as dividends as opposed to being retained in the business since debt has filled the financing gap. Drawing from the above, we conclude that commercial banks in Nigeria do not operate optimal capital structures. It is our recommendation that banks conduct an in depth study of their capital mixes in order to understnad how best to optimze their capital structures for better performance in the future.

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