| dc.description.abstract | Long term financing is very important to a business. It is normally used as a facilitator for the acquisition of assets of a business that include equipment, land, machinery, buildings and other 'major assets that may include mergers and acquisitions; however there are factors influencing long term debt financing in the organizations and thus the main purpose of the study was to investigate the factors affecting long term debt decisions for Kenyan firms quoted at NSE.
The study used descriptive research design. The population of interest was 47 companies quoted at the Nairobi Stock Exchange and the response rate was 38 companies. The primary data was collected by use of questionnaires which were circulated to the companies through drop and pick method. Liner regression method was used to analyze collected data. Data was also analyzed through the help of Statistical Package for Social Science (SPSS) Version 17.
The study established that majority of the companies used long term debt for financing. Factors such as, firm's size, and corporate tax affected the borrowing decision of an organization and borrowing position of the company. Interest rate was also a very important determinant of long term debt financing decisions since it carried with it the threat of liquidation. The result shows that interest rates had a major impact on the debt financing decisions as also indicated by the literature review.
Managers should also consider conditions in the stock and bonds market before deciding the long term debt to take however the organization should try to effectively and efficiently utilize the available funds. There is also need for government to reduce the level of personal income tax and company income tax further to encourage firms to plough back their profits into profitable investment opportunities. Government should therefore pursue sectoral allocation of credit in favour of firms. This will also enable firms to take advantage of the tax benefit from debt financing. | en_US |
