Influence of Firm Financial Characteristics on Leverage of Non-Financial Listed Companies in Nairobi Securities Exchanges

Author(s)

Helen Wairimu , Prof Willy Muturi , Oluoch Oluoch ,

Download Full PDF Pages: 93-103 | Views: 762 | Downloads: 216 | DOI: 10.5281/zenodo.3456933

Volume 8 - May 2019 (05)

Abstract

Listed and non-listed institutions are always in need of finances geared towards enhancing their firm performance which has a pivotal role in the relationship they will enjoy internally and externally. The ability of an organization to invest borrowed capital on projects with a higher return on investment has a significant impact on shareholders wealth maximization. Panel regression modelling revealed the positive influence of firm size and profitability and inverse influence of tangibility and growth opportunities on the leverage of listed non-financial companies in Nairobi securities exchanges.

Keywords

Financial characteristics, Firm size, Profitability, Tangibility, Growth opportunities 

References

  1. Acheampong, P., Agalega, E., & Shibu, K. (2014). The Effect of Financial Leverage and Market Size on Stock Returns on the Ghana Stock Exchange: Evidence from Selected Stocks in the Manufacturing Sector. International Journal of Financial Research, 5(1), 125-134.
  2. Addae, A., Nyarko-Baasi, M., & Hughes, D. (2013). The Effects of Capital Structure on Profitability of Listed Firms in Ghana, European Journal of Business and Management, 5 (31), 215-229.
  3. Badar, R., & Saeed, A.  (2013). Impact of Capital Structure on Performance Empirical Evidence from Sugar Sector of Pakistan, European Journal of Business and Management, 5 (5): 78-86.
  4. Chesang, D., & Ayuma, O. (2016). Effect of Financial Leverage on Profitability of Listed Agricultural Firms at the Nairobi Securities Exchange, International Journal of Economics, Commerce and Management, 4(12),445-493.
  5. Ezeoha, A. E. (2008). Firm size and corporate financial leverage choice in a developing economy: Evidence from Nigeria, The Journal of Risk Finance, 9(4), 351-364.
  6. Gathogo, G., & Ragui, M. (2014). Capital Structure of Kenyan Firms: What determines it? Research Journal of Finance and Accounting, 5(5), 118-125.
  7. Githira, C. W., & Nasieku, T. (2015). Capital Structure Determinants among Companies Quoted in Securities Exchange in East Africa, International Journal of Education and Research, 3(5), 483-496.
  8. Granger, C. W. (1988). Causality, Cointegration, and Control. Journal of Economic Dynamics and Control, 12(3),551-559.
  9. Greene, W. H. (2008). The Econometric Approach to Efficiency Analysis. The Measurement of Productive Efficiency and Productivity growth, Retrieved from http://citeseerx.ist.psu.edu on 5/8/2017.
  10. Gujarati, D. (2003). Basic Econometrics (4th Ed.). New York: McGraw Hill.
  11. Handoo, A., & Sharma, K. (2014). A study on Determinants of Capital Structure in India, IIMB Management Review, 14(26), 170-182.
  12. Handoo, A., & Sharma, K. (2014). A study on Determinants of Capital Structure in India, IIMB Management Review, 14(26), 170-182.
  13. Hasannejadneisi, S., Mazraeh, S., & Mousavi, Z. (2013). Evaluating the Relationship between Firm Characteristics and Financial Leverage, Journal of Novel Applied Sciences, 2(2),978-981.
  14. Ikechukwu, I. O., & Madubuko, C. (2016). Effect of Firm Size on Corporate Borrowing of Oil and Gas Firms in Nigeria, International Journal of Economics, Finance and Management Sciences, 4(5),303-308.
  15. Mahnazmahdavi, M., Mokhtarbaseri, M., Zare, A.  & Zare, H. (2013). The Effect of Sales Growth on the Determinants of Capital Structure of Listed Companies in Tehran Stock Exchange. Australian Journal of Basic and Applied Sciences, 7(2), 306-311.
  16. Muchiri, M. J., Muturi, W. M., & Ngumi, P. M. (2016). Relationship between Financial Structure and Financial Performance of Firms Listed at East Africa Securities Exchanges. Journal of Emerging Issues in Economics, Finance and Banking 5(1), 1734-1755.
  17. Mwangi, J. M. (2016). Effect of Financial Structure on Financial Performance of Firms Listed at East Africa Securities Exchanges, (PHD Thesis), Jomo Kenyatta University of Agriculture and Technology, School of Business, Nairobi, Kenya.
  18. Mwangi, L. W., Makau, M. S., & Kosimbei, G. (2014). Relationship between Capital Structure and Performance of Non-Financial Companies Listed in the Nairobi Securities Exchange, Kenya. Global Journal of Contemporary Research in Accounting, Auditing and Business Ethics, 1(2),72-90.
  19. Mwangi, M., & Birundu, E. M. (2015). The Effect of Capital Structure on the Financial Performance of Small and Medium Enterprises in Thika Sub-County, Kenya, International Journal of Humanities and Social Science, 5(1),151-156.
  20. Tai, L. M. (2017). Impact of the Financial Markets Development on Capital Structure of Firms Listed on Ho Chi Minh Stock Exchange. International Journal of Economics and Financial Issues, 7(3), 510-515.
  21. Tarus, T. K., Chenous, N., & Biwott, G. (2014). Do Profitability, Firm Size and Liquidity Affect Capital Structure? Evidence from Kenyan Listed Firms, European Journal of Business and Management, 6(28), 119-124.
  22. Wahome, M. N., Memba, F., & Muturi, W. (2015). The Effects of Firm Size and Risk on Capital Structure Decisions of Insurance Industry in Kenya, International Journal of Scientific and Research Publications, 5(8),1-12.

xxiii.  Wooldridge, J. M. (2002). Econometric Analysis of Cross Section and Panel Data. Cambridge, MA: MIT Press.

Cite this Article: