Perception of Employees on the Influence of International Human Resource Management Policies on the Performance of Coca-cola Company Limited in Kenya

Abstract

To balance between losing a business and a loss in a business is sometime challenging and especially on leading business. Adverse selection is a key aspect by management. It requires good understanding to ensure that maximization of investors’ money is achieved. This research was set out to analyze effects of loans which the borrower is not making interest payments on value of financial institutions listed in Nairobi stock exchange. It was founded on some theories i.e., market efficiency theory, agency theory, information asymmetry theory and credit agency theory. It was conducted through a descriptive design which was considered suitable for this research because it offered an outline to portray relevant features of the variables of interest from a person-oriented perspective which also allows for a multifaceted approach to data collection and examination. The information gathered was aggregated, sorted, validated and arranged before it was analyzed in the Statistical packages for social sciences (SPSS). Secondary data was used which was gathered from the analysis of finance books of commercial banks in consideration and from Nairobi stock exchange records/reports. It includes, stock value, non-performing or insolvent loans and yearly accumulated loans and advances for calculation of insolvent loan ratio. For the resources availability such as capital measure, risk weight and credit exposure was established and tier I and tier II capital was used to get core capital Commercial banks quick assets and liabilities for liquidity measure. Total loans and loan loss for asset quality description. All this data was for 5 years starting from year 2012 to 2016.The data was analyzed via a multiple regression model which tested the relationship between dependent variable i.e. value of commercial banks and dependent variance which is the non-performing loan and control variables i.e. capital adequacy, Liquidity and asset quality. The finding of the study are, the higher the NPLs, the lower the stock value (negative relationship): this depicts that NPLs affect the stock value of commercial banks listed in the NSE in a negative manner. By the fact that, higher NPLs command higher cost resulting from loan provisions and loan loss costs. The higher the costs, the greater the reduction in stock returns, which in turn trickles leads to lower stock value. The value representing asset quality, capital adequacy and liquidity management is negative in relation to stock value of NSE listed commercial banks. This shows a negative relationship between these variables and stock value of commercial banks. If asset quality is high, capital for investment choices and other requirements is available and liquidity then the stock value of commercial banks at the NSE is negative. Following these findings, the study concludes that non-performing loans have an adverse effect onthe stock value of commercial banks listed in the NSE. The controlling variables that is capital adequacy, asset quality and liquidity quotient determine how the stock values of commercial banks change over a given period of time. Capital adequacy leads to underperformance of stocks in the market as they had negative cumulative abnormal return values especially in the post-announcement dates. Deficiencies in any of the variables calls for corrective measures or reduced budgets in achieving set objectives as opposed to when the variables are sufficient. Following the study conclusion, the recommendation are: Investors should not sole use capital adequacy announcement to make investment decisions as that would not make them have an above normal returns since the market digest the same information in almost a similar way. The finance managers should therefore pay attention to the determinants of stock value especially the liquidity of commercial banks listed at the NSE. The listed banks ought to sort out the process of liquidity administration through distinguishing, controlling, observing, and measuring liquidity risk. Such a procedure involves no less than four components, the liquidity administration strategies of the responsibilities of the Board of Directors (BOD), the Asset Liability Committee (ALCO), the effectiveness of the information system for checking and announcing liquidity risk as well as the functions of internal control frameworks for liquidity administration. The major limitation of the study was use of secondary data only. Primary data could add substance to study with personal responses from bank’s management stating the levels of NPLs effect on their stock. The suggestion is that another study to include the primary data to capture those factors which cannot be stored in numerical report.