Capital Structure, Firm Growth, Macroeconomic Factors and the Value of Non-financial Firms Listed on the Nairobi Securities Exchange, Kenya

Abstract

Capital structure analysis is one of the most sensitive parts of business funding, owing to its connections to other components of financial leverage. Financial leverage is a significant component for any business, both in terms of wealth maximization as well as its impact on the capacity of the business to operate more efficiently and effectively in a dynamic marketplace. The main difficulties confronting Kenyan businesses include a lack of financial resources to support businesses and their ideals, as well as an intrinsically higher operating costs, meanwhile CS alone cannot undertake a firm's worth. In retrospect, corporate collapse among Kenyan companies is an often discussed subject. Numerous research studies have been performed on the bond amongst company capital structure and financial performance of enterprises, the majority of which were accompanied in mature countries or markets. However, few research partake assessed the effect that capital structure has on an entity's value, which would be the basis for the present argument. Thus, the purpose of this research was to examine any cumulative effect of the study entity's primary characteristics on its relative value. The purpose of this report was to investigate the mediating and moderating conclusions of firm growth and macroeconomic component characteristics on the relationship between capital structure and relative net worth of disclosed non-financial syndicates. In this instance, the organizations were filtered based on full and incomplete data from 2015 to 2019. In which 36 businesses with a total of 180 observations were used as the population for the thesis study. STATA 14.0 remained castoff to probe the data for simplicity of understanding. The report's conclusions exhibited a statistically meaningful connection amongst company worth and CS. As a result, there was a statistically meaningful correlation amongst capital structure and company growth. Company expansion acts as a moderator in the bond among firm value and capital structure. Macroeconomic variables have little conclusion on the relationship between entity business value and capital structure. There is a statistically significant correlation between nonfinancial entity characteristics reported on the Nairobi Securities Exchange. The drive of this enquiry was to assess that inconclusive results reported in the existing empirical literature on company money via the use of mediating as well moderating factors. The thesis contributes to the build of information on commercial finance by analyzing the relationship between the research's primary factors. The findings indicate an indirect connection exists among the independent and dependent variables, which is mediated by company growth. Additionally, the research offered insightful analysis and suggestions to assist governments in developing viable monetary and fiscal policies within the CBK that would promote an economic climate favorable to businesses accessing credit at realistic interest rates. As a result, a statistically noteworthy bond amongst business value and capital structure was found. The findings of this dissertation may assist corporate administration in adjusting capital structure to allow more effective management and in determining the optimal method to balance the impacts of macro-economic variables on capital structure that do not directly influence a value of the company. Government must consider these findings more helpful for monitoring listed companies' investments and capital raising operations in the capital markets, which may assist reduce businesses' deregistration since the Nairobi Securities Exchange as a product of flop to receive a reasonable return on their investing activities.