Influence of Risk Management Strategies on the Financial Performance of State Corporations in Kenya

Abstract

Risk management strategies are perceived by academicians, practioners and regulators as main influencers of financial performance in state corporations in Kenya. Although there have been a number of studies on risk management strategies, very few or none have specifically examined the impact of risk management strategies on the financial performance of a Kenyan state corporation. The study topic was the influence of risk management skills on the financial management in the state corporations in Kenya. The main objective of this study was to determine how risk management strategies influence financial performance of state corporations in Kenya. The study was guided by the following objectives: to investigate the influence of interest coverage ratio on financial performance in the state corporation; to establish the influence of Firm size on financial performance in state corporation; to assess the influence of Capital structure on financial performance in state corporations; to establish the influence of Liquidity ratio on financial performance in state corporations; and, to assess the influence of joint financial risk strategies on financial performance in state corporations. The study employed descriptive correctional design. Secondary data was collected from 6 state corporations in Kenya namely, Consolidated Bank of Kenya, Kenya Commercial Bank, Kenya Electricity Generating Company, Kenya Power and Lightning Company Ltd, Kenya Ports Authority and Kenya National Highways Authority. The data was collected for the period 2017 to 2022. Entity Secondary data was collected from Central bank website, office of the Auditor general website and Nairobi Stock exchange. The secondary data used was publicly available. Data was analyzed using Statistical Package for Social Scientists (SPSS). Descriptive and inference analysis was carried out using SPSS. Results for quantitative data are presented in tables and factual statements. It is believed that the findings from the sample is a representative of the situation in the state corporations in Kenya to a reliable degree. The study findings indicate that, interest coverage ratio, firm size, capital structure and liquidity ratio and all of them jointly do not influence financial performance of state corporations. The study recommends use other variables that are not in this research and extending the research to organisations in other industries and especially those in the private sector.