| dc.description.abstract | Capital structure of firm is the choice between debt and debt equivalent sources of finance on one hand and the issue of equity to finance the firms' activities on the other hand. Hence, capital structure decisions have great impact on the performance of firms. This study proposed that there are measurable linkages between financial leverage (capital structure) and financial performance which can easily be established through analyses of return on equity, return on asset, price/earnings ratio, capitalization ratio, liquidity and return on investment.
Therefore the purpose of this study was to establish whether there is any relationship between capital structure of listed firms in the Nairobi Stock Exchange and their financial performance through analysis of financial parameters. The objectives of the study were to determine the relationships between capital structure and financial performance of listed firms at Nairobi Stock Exchange, and investigate capital structure dynamics of listed firms and their relative impact on firms' financial performance.
The causal research design was adopted in this study. The population of this study comprises 57 firms that were listed at the Nairobi Stock Exchange between year 2000 and 2009. Purposive sampling technique was used for this study. The sample comprises 32 non- financial firms that were continuously listed for a period often years from year 2000 to 2009. The sample excluded 13 financial firms (Banks and Insurance firms) and 12 non-financial companies which were not continuously listed during the study period; 2 firms were de-listed, 4 firms were suspended and 6 were newly listed.
Pearson correlation which establishes relationship between variables indicated that leverage is determined by return on equity, liquidity, and return on investment. This is because there is strong relationship between leverage and return on equity, liquidity, and return on investment. Co-efficient of the regression shows that there is relationship between leverage and return on equity, return on asset, liquidity and return on investment.
Capital structure of firm is the choice between debt and debt equivalent sources of finance on one hand and the issue of equity to finance the firms' activities on the other hand. Hence, capital structure decisions have great impact on the performance of firms. This study proposed that there are measurable linkages between financial leverage (capital structure) and financial performance which can easily be established through analyses of return on equity, return on asset, price/earnings ratio, capitalization ratio, liquidity and return on investment.
Therefore the purpose of this study was to establish whether there is any relationship between capital structure of listed firms in the Nairobi Stock Exchange and their financial performance through analysis of financial parameters. The objectives of the study were to determine the relationships between capital structure and financial performance of listed firms at Nairobi Stock Exchange, and investigate capital structure dynamics of listed firms and their relative impact on firms' financial performance.
The causal research design was adopted in this study. The population of this study comprises 57 firms that were listed at the Nairobi Stock Exchange between year 2000 and 2009. Purposive sampling technique was used for this study. The sample comprises 32 non- financial firms that were continuously listed for a period often years from year 2000 to 2009. The sample excluded 13 financial firms (Banks and Insurance firms) and 12 non-financial companies which were not continuously listed during the study period; 2 firms were de-listed, 4 firms were suspended and 6 were newly listed.
Pearson correlation which establishes relationship between variables indicated that leverage is determined by return on equity, liquidity, and return on investment. This is because there is strong relationship between leverage and return on equity, liquidity, and return on investment. Co-efficient of the regression shows that there is relationship between leverage and return on equity, return on asset, liquidity and return on investment.............................. | en_US |
