Determinants of Asset Structure for Companies Listed at Thenairobi Stock Exchange
Abstract
This study was an empirical inquiry into the determinants of asset structure for
companies quoted at the Nairobi Stock Exchange. In this case, the term asset structure
being used to mean the liquidity pattern displayed by various assets held by a company or
the degree of liquidity of a company's total assets.
The objectives of the study were, firstly to identify the characteristics of the various asset
structures employed by the quoted firms and secondly, to establish the nature of
relationship that exits between the determinants of asset structures and the asset structure
themselves. The determinants of asset structure under study were variability of cash
flows, profitability, debt ratio, growth in the firm and size of the firm These represented
the independent variables while asset structure represented the dependent variable.
The study was based on secondary data collected from the NSE hand book of the year
2002 and financial statements of all the quoted companies covering the period between
January 1998 and December 2002. From this data all the variables relevant to the study
were calculated i.e. values representing the determinants of asset structure and those
representing the asset-structure throughout the five-year study period. The data collected
was analyzed using regression analysis from which a model of five independent variables
and one dependent variable was developed
The findings of the study confirmed that, variability of cash flows, profitability, debt
ratio, growth in the firm and size of the firm are for sure some of the determinants of
asset structure and there exits a linear relationship between the asset structure and the
determinants of asset structure. It was also found out that firms in the Finance and
Investment sector have more liquid asset structures while those in the Agricultural sector
have less liquid asset structures. Both Commercial and Services sector and the Industrial
and Allied sector have approximately balanced asset structures with respect to current
assets and non-current assets.
Citation
Master of Business and Administration, University of Nairobi, 2003Publisher
University of Nairobi. Faculty of Commerce