Corporate financing decision of firms has remained a debatable issue in both corporate and academic discussions. The present study aims to investigate the factors responsible for the financing decision of firms in Nigeria. To achieve this, 63 nonfinancial firms listed on the Nigerian stock exchange were selected based on data availability for the period of 2001 to 2010. Financial firms were excluded because of their similar regulatory framework and in order to ease the comparability of results. While most studies focused on debt-ratio as a measure of leverage, the present study uses the ratio of total debt and total assets. The empirical findings from the static panel regression analysis confirms that Nigerian firms tends toward internal financing through retained earnings, equity and other short term funds, against long term financing majorly through debts and other long term loans. One factor that could be said to account for this decision is the ill developed bond market in the country as well as the accessibility of firms to long term finances from the existing sources that is marred with high interest rates and huge collaterals.