J Fin Mark 2018 Volume 2 Issue 4 10 http://www.alliedacademies.org/journal-fnance-marketing/ Research Article 1958) [6-8]. They are of the opinion that in a perfect capital market, the valuation of a frm is irrelevant to its capital structure, whether it is highly levered or has a lower debt component in its fnancing mix. Instead, leverage merely changes the allocation of cash fows between debt and equity without altering the total cash fows of the frm but in a real world, capital markets are not perfect. Since then, other theories and research works have been developed and they include the pecking order theory as introduced by Donaldson (1961) which advocates a specifc pattern of fnancing [9,10], frst by internal funds then externally by debt capital and lastly by equity capital. The static trade-off theory contrary to the pecking order which states the existence of an optimal capital structure which is obtained where the net tax advantage of debt fnancing balances leverage related costs such as fnancial distress and bankruptcy, holding frm’s assets and investment decisions constant (Baxter, 1967; Altman, 1984) [11] signifying a cost – beneft tradeoff between costs and benefts associated with leverage. The total value of a levered frm equals the value of the frm without leverage plus the present value of the tax savings from the debt less the present value of the fnancial distress. Empirical studies also show mixed results have in terms of statistical relationship. Mutai [9] found a positive but insignifcant relationship [12] between fnancial leverage and asset growth of frms. Sarchah & Hajiha [13] found sales growth and proft growth to have signifcant negative Financial leverage and asset growth: Evidence from non-fnancial frms in Nigeria. Kenn-Ndubuisi, Juliet Ifechi*, Onyema JI Rivers State University, Port Harcourt, Nigeria Abstract This study analysed the relationship between fnancial leverage and asset growth of 80 non- fnancial frms quoted on the Nigerian Stock Exchange over the period of 2000 to 2015. Financial leverage measures used include the total debt to capital ratio, debt to equity ratio, cost of debt, debt to asset ratio and long term debt to capital ratios. The panel regression analysis model which includes the pooled regression model, fxed effect model and the random effect model was used for data analysis with the Hausman Test for appropriate model choice. The result states that there is a signifcant relationship with all the fnancial leverage variables except the cost of debt. Asset growth also shows a signifcant negative relationship with all the control variables such as the interest rate, infation rate and exchange rates. We therefore recommend that quoted frms should employ fnancial leverage in such a way that the cost of debt does not outweigh its benefts as proposed by the trade off theory and also that fnancial decisions should be made in consonance with the prevailing infation, interest and exchange rates by the management of quoted frms in Nigeria. Keywords: Financial leverage, Asset growth. Accepted on November 15, 2018 Introduction Asset is generally defned as anything of value that is owned by an entity, that is capable of generating income. Growth in a company’s asset is necessary for its survival in a competitive and changing market environment and also used to increase its economic returns. The purchase of heavy asset requires a large investment in capital which can compel companies to source for additional fnance externally. External source of fnancing such as debt is key in the acceleration of the growth of a company’s asset as it allows the frm to leverage on its existing fund towards achieving its growth targets. It also allows for rapid expansion, immediate cash infows, reduction of risk and economies of scale. Hence, a frm’s growth is a key factor in increasing profts, decreasing risk and achieving stability (Hampton, 1993) [1-5]. The ability of a frm to utilize debt is referred to as fnancial leverage which span out from the debate of the optimal capital structure and has been a topic for debate in fnance for several decades. The importance of leverage in the capital structure of a company is that its effcient use reduces the weighted average cost of capital (WACC) of a company thereby lowering the cost of capital which in turn causes an increase in the net economic returns of the frm. A number of theories have been proposed to explain the variations in debt ratios across frms. The important reference theory originated from the path breaking contribution of Modigliani and Miller (famous for their irrelevance theory in