| dc.description.abstract | This study focuses on the determinants of capital structure for firms listed at the Nairobi
Stock Exchange. The objective of the study is to establish the relationship between
capital structure, corporate diversification strategy, products umqueness and
environmental dynamism. The study used 21 firms listed at the Nairobi Stock Exchange
for the period between 1999 and 2008.
It has been predicted that leverage is positively related with diversification strategy,
negatively related with product uniqueness and dynamic environment (Kochhar and Hitt,
1998); Titman and Wessels, 1988 and Simerly and Li, 2000).
Using market analysis, this study found consistency on diversification strategy and
product uniqueness with prediction but they have not been found to be significant
determinants of capital structure for firms listed at NSE. Environmental dynamism has no
effect. This implies there are other important factors that influence decisions of listed
firms while sourcing finances by the listed firms.
Analysis by sector however reveals inconsistencies with predictions but show that
diversification strategy and product uniqueness are important determinants of capital
structure for all sectors (agricultural, commercial, Industrial and allied). Environmental
dynamism nevertheless does not influence choice of capital structure for firms listed at
NSE.
On conclusion, for firms listed at the Nairobi Stock Exchange, corporate diversification
strategy and product uniqueness partly influence choice t1f capital structure as predicted
by explanatory variables and partly for other reasons. Environmental dynamism does not
influence choice of capital structure for firms listed at NSE | en |
