The Effect of Debt Maturity Determinants on Performance of Firms Listed at Nairobi Securities Exchange

Abstract

The main goal for this research was to study the determinants of debt maturity and their influence on performance of companies registered with Nairobi Securities Exchange . The research was anchored on the trade off theory, market timing theories and the theory of pecking order. The design which this research work applied was descriptive. The populace unit of examination comprised of the 65 firms listed in the Nairobi Securities Exchange with the study duration covering a time span of 10 years from 2008 to 2017. Secondary data was utilized in this examination and this information was obtained Nairobi's Securities Exchange Handbook Series covering the 2007-2018. Diagnostic tests that were applied to the gathered information incorporated the corroborative test for Variance Inflation Factor (VIF) to test for multicollinearity. The investigation applied minimums, maximum, means and standard deviations as measures for descriptive outcomes. Pearson's Correlation was applied to test for quality and association of the autonomous factors to the study factors with Goodness of Fit, ANOVA (Analysis of Variance), F measurement/criticalness of the factors and regression of coefficients in the midst of the response variable and indicator factors. From the result outcomes, multicollinearity findings indicated that the study variables did not have symptoms of multicollinearity hence no need to be removed from the multiple regression model. Furthermore, Pearson’s Correlation findings suggested that the association between performance and debt maturity was negative and weak. ANOVA statistics indicated that the independent variables; leverage, growth opportunities, asset tangibility and taxes are good predictors of debt maturity businesses registered with the Nairobi Securities Exchange . The findings also suggested that debt maturity in isolation is not a key predictor of performance for listed firms at NSE. From the study outcomes, it was concluded that all independent variables; leverage, liquidity, asset tangibility and growth opportunities were satisfactorily explaining both debt maturity and performance of registered businesses. The research gives recommendation that the institutions’ management registered with the NSE put in measures to minimize gearing in terms of leverage. The researcher also recommends that firms listed in the put in measures to reduce taxation costs as this has a negative relationship with performance.