An Investigation of the Relationship Between Industry Type and Capital Structure of Companies Listed at the Nairobi Securities Exchange (Nse) Kenya

Abstract

One of the most complex areas in financial management is long term financial since it is related to other financial decision variables. This study aimed at exploring the existence (or not) of a relationship between the long term financial structure of companies listed at the NSE and their industry classification for a 10 year period between 2006 and 2015. Trend analysis, descriptive statistics and ANOVA were applied on the data collected. The outcome was that in 6 out of 7 industries studied, organisations were using lesser debt in their capital structures as time went by. The study also found out that the capital structure varied from industry to industry even though the variation was not significant. The variables that were independent i.e. the structure of the assets, size of the organisation, growth rate of the organisation, profitability levels and liquidity levels were found to vary significantly from one industry to another. The outcome of this study demonstrates that long term financial structure of companies varies from one industry to another and therefore it is important to consider the industry effects when making decisions