| dc.description.abstract | Corporate finance literature suggests that the capital structure decision plays a critical role in
determining the performance of a firm. This study investigated the relationship between capital
structure and corporate performance of 27 selected companies listed within the Nairobi
Securities exchange ( NSE) excluding banks during the period 2001-2010. In this study, the
capital structure is considered in terms Debt and Equity. The relationship between capital
structure and corporate performance is one that has received considerable attention in the finance
literature. This is because it represents one of the most controversial issues in the field of finance.
Its in this respect the researcher carried the study in the Kenyan Nairobi Securities Exchange
market. The objective of the study was to assess the relationship between debt and firms
performance for the selected firms in NSE, to assess the relationship between Equity and firms
performance for the selected firms in NSE and to assess the relationship between Age and firms
performance for the selected firms the Nairobi Securities exchange. The study used financial
ratios such as , Return on Equity (ROE), Return on Assets ( ROA), as measures of firm
performance. The study also used debt/equity ratios, profitability, to analyze the relationship
between capital structure and firms performance. Secondary data from Nairobi Securities
Exchange hand book was collected for the period of 10years ( 2001-2010). It comprised of
Audited financial statements, daily share prices including open and closing prices were obtained
basically from the NSE for ten years, and outstanding shares, profits, total assets, daily market
prices , equity. Data obtained was analyzed into useful information using a statistical package for
Social science ( SPSS), MS-excel. Multiple regression analysis was used since it is the best
suited for providing a means of establishing quantitative association between variables. The
result of the research explains a significantly positive relationship between Equity and ROE and
ROA as measures of firm performance, while Debt and firms age has a negative correlation with
Return on Equity (ROE ) and Return on Asset (ROA). | en |
