Factors Affecting Financial Performance of Companies Listed In the Nairobi Securities Exchange

Author(s)

Johnbosco Mulwa Mutua , Mr. Wekesa Moses Wanjala ,

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Volume 6 - September 2017 (09)

Abstract

The study seeks to examine the factors that affect the financial performance of listed firms on the NSE.  The study adopted a conceptual framework to show a diagrammatic relationship between independent variables and dependent variable. The study was informed agency theory; pecking order theory and stakeholders’ theory was used. The study used primary data collected using a structured, modified Likert scale questionnaire. The sample size was 384 officers from listed companies on the NSE. The reliability was assessed using the Cronbach's alpha. Regression analysis findings showed that, individually, each of the factors (dividend policy (0.184), capital structure (0.189), had a positive and significant effect the firm’s financial performance. The combined regression model showed that only capital structure (-2.508) had a significant and negative effect on the firm’s financial performance. Furthermore, the findings of the study are of immense benefits to listed firms and their directors, because they tell about the compliances level of their companies to statutory and regulatory requirement and avoidance of sanctions.

Keywords

dividend policy, capital structure, financial performance, firms

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