| dc.description.abstract | The Management of corporate firms is confronted with many decisions affecting the
growth, profitability and survival of their organizations. Inevitably financing capital
investments decisions constitute such important decisions corporate managers have to
make on behalf of their companies. Managers have to decide on how to finance capital
investments and usually consider various factors in making their financing decisions.
The principal objective of this study was to identify how capital investments are financed
by quoted companies in Kenya.The study also sought to identify the factors that the
management of quoted companies consider in making their financing capital investments
decisions. In order to meet these objectives, secondary data was collected from annual
published results from 52 firms listed at the Nairobi Stock exchange and the relationship
between capital investments and financing variables namely, internally generated funds,
New Equity capital, Long-term debt and Short term debt were examined over the 1997 to
2001 period. Primary data was also collected through the use of questionnaires from the
financial managers seeking information on how they finance capital investments and the
factors that influence their financing capital investment decisions.
Correlation analysis was used for the secondary data collected and the results revealed
that capital investments were significantly positively collerated with internally generated
funds among all the industry sectors of quoted companies. The correlation between
capital investments and New equity, Long-term debt and Short-term revealed varied
correlation's among the industry sectors in the study.
The study found that many factors influence.managers in their financing capital
investment decisions. Among the most important factors were stability of future cash
flows, profitability of the business, level of competition in the industry, stability of future
sales, and the level of interest rates in the economy | en |
