Effect of Corporate Risk Hedging Practices on Firm Value of Listed Energy Sector Firms in Kenya

Abstract

This study investigates the effect of corporate risk hedging practices on firm value of listed energy sector firms in Kenya. With the world becoming a global village more firms are being exposed to corporate risk hedging requiring them to seek ways of shielding themselves against the vice. Data was gathered from company annual reports of firms and questionnaires which were mailed to the selected investors. The research design used was cross sectional research design. This study used both quantitative and qualitative data in developing a strong evidence base to supporting determinants on corporate hedging of firms in NSE. The population of this study included all the number of inhabitants in the examination comprised of all the five recorded organizations at Nairobi Securities Exchange as recorded in appendix 1. In data collection, study utilized disclosures in annual reports of firms and questionnaires comprising of structured questions which were administered to investors in each firm that participated in the study. In analyzing responses the Statistical Package for Social Sciences (SPSS) version 22 was used to present descriptive statistics, such as percentages, frequency distributions, measures of central tendencies, measures of variations and graphical expressions. The study results support the view that financial determinants of listed firms in NSE have a significant influence on corporate risk hedging. The findings of this study need to be further developed in future research. On the other other hand, research could focus on identifying other practical financial determinants on corporate risk hedging such as substitute for hedging. The study recommended that the strategy producers ought to build up an efficient trade exchanged subsidiary market in Kenya to help fiscally compelled firms with exceedingly factor money streams and outside deals. The investigation additionally featured successful use of subsidiary instruments will empower companies to characterize their supporting arrangements that are good with company's inner venture and financing strategies. In this way, legitimately arranged and executed venture, financing and supporting approaches, won't just encourage firms in accomplishing their essential objective of investors' riches boost, yet may likewise upgrade monetary soundness.