dc.contributor.author | Kinyua, Samuel | |
dc.date.accessioned | 2013-05-15T15:21:13Z | |
dc.date.issued | 2009 | |
dc.identifier.citation | MBA | en |
dc.identifier.uri | http://erepository.uonbi.ac.ke:8080/xmlui/handle/123456789/23369 | |
dc.description.abstract | Liquidity level is one of the critical policy decision that management of companies has to
make on a day to day basis. The decision made has great implications on the success of
the company because it involves a trade off between costs and benefits of maintaining
liquid cash. The benefit includes ability to take advantage of any unexpected profitable
business opportunities. On the other hand, liquid cash has lower return as compared to
other physical assets.
In this study, I model the firm's decision to invest in liquid assets when external
financing is costly. The optimal amount of liquidity is determined by the trade off
between the low return earned on liquid assets and the benefit of minimizing the need for
costly external financing. The model predicts that the optimal investment in liquidity is
increasing in the cost of external financing, the variance of future cash flows, and the
return on future investment opportunities, while decreasing in the return differential
between the firm's physical assets and liquid assets.
An empirical investigation on 26 firms listed on Nairobi Stock Exchange supported the
models predictions. The data for the 26 firms was collected from the Capital Market
Authority Library and analyzed through the use of Regression and Correlation analysis. | en |
dc.description.sponsorship | University of Nairobi | en |
dc.language.iso | en | en |
dc.publisher | University of Nairobi | en |
dc.title | The determinants of corporate liquidity: evidence from Nairobi Stock Exchange | en |
dc.type | Thesis | en |
local.publisher | School of Business, College of Humanities and Social Sciences | en |