Financial Leverage And Firms Growth
Abstract
The study sought to examine how financial leverage affects the growth of listed agricultural
firms in Kenya using a panel regression model. Since every firm yearns to either grow
externally or internally they make financial decisions on how to get capital to fund such
growth through acquiring debt or equity. The study purpose is to contribute to the
discussion about the effect of financial Leverage on growth of listed agricultural firms.
This paper used annual secondary data available for all listed agricultural firms with NSE
and specifically from their audited financial statements and reports, as well as from NSE
handbook. Panel regression model was used for estimation in the study. Growth is measure
in terms of asset growth where annual assets acquired are aggregated and the percentage
changes determined to help track the growth of the firm. The study found leverage and
profitability positively impacted firm’s growth while the age of the firm was negatively
associated with growth of the firm. The fact that age negatively impacted firm’s growth
was contradictory as it expected that as a firm grows in age, then is gains a lot in terms of
market share, customers and general industry experience that my help it adapting in both
good economic times and tough times.
Publisher
University of Nairobi
Subject
Panel Data AnalysisRights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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