| dc.description.abstract | A number of firm characteristics have been studied by many researchers, practioners and
academicians to understand their effect on performance. This study sought to find the
effect of selected firm characteristics namely firm size, leverage, firm age, liquidity, and
board size on firm financial performance as measured by return on assets.
The study used cor relational research design in an attempt to investigate the effect of firm
characteristics on firm financial performance and also the extent of causation was
documented by running a multi variate linear regression analysis. The study’s population
was seven agricultural firms listed at the Nairobi Securities Exchange and the researcher
selected six out of the seven listed firms due to inaccessibility of the seventh listed firm
from the year 2007 to 2012.
The study evidenced that the only variables that were statistically significant were
liquidity and board size and the other three variables that were not statistically significant
were namely firm size, leverage and firm age. Though firm size, leverage, firm age, and
liquidity were positively related to firm financial performance and board size was the
only variable that was negatively related to firm financial performance. The study
recommends to the management to focus efforts on those variables that positively affect
their long run financial performance such as increase firm sizes, use of more leverage up
to a point when net costs are suffered as a result of excessive leverage, reduction of firm
and product life cycle, extending more credit sales to customer and paying of suppliers
promptly as per terms and reduction of board size as it results in more expenses. | en |
