dc.contributor.author | Siro, Robert O | |
dc.date.accessioned | 2013-11-18T09:25:33Z | |
dc.date.available | 2013-11-18T09:25:33Z | |
dc.date.issued | 2013-10 | |
dc.identifier.citation | Master Of Business Administration, University Of Nairobi, 2013. | en |
dc.identifier.uri | http://erepository.uonbi.ac.ke:8080/xmlui/handle/123456789/59242 | |
dc.description.abstract | The choice between debt and equity financing has been directed to seek the optimal capital
structure. Several studies show that a firm with high leverage tends to have an optimal capital
structure and therefore it leads it to produce good performance, while the Modigliani-Miller
theorem proves that it has no effect on the value of firm. The importance of these issues has only
motivated researchers to examine the relationship between capital structure and firms financial
performance. The objective of this study was to establish the effects of capital structure on
financial performance of listed firms on securities exchange in Kenya.
The financial performance was measured in terms of return on equity while capital structure was
measured in terms of debt ratio. The period of study was 2012. It is important to note that during
this period of study, Kenya experienced political anxiety, leading to uncertainty in the securities
market. This presents an interesting period of study considering the ups and downs of the trade
cycle. The population of study consisted of all the 61 listed firms duly registered with capital
market authority of Kenya in 2012. Secondary data used was obtained from the Nairobi
securities exchange handbook and also in firm’s publications. Data analysis was done by use of
regression analysis model with the help of Statistical Package for Social sciences Software.
The results obtained reveal that there was an inverse relationship between capital structure and
financial performance of listed firms in securities exchange in Kenya. The findings indicate that
the higher the debt ratio, the less the return on equity which therefore supports the need to
increase more capital injection rather than borrowing, as the benefits of debt financing are less
than its cost of funding. | en |
dc.language.iso | en | en |
dc.publisher | University of Nairobi | en |
dc.title | Effect of Capital Structure on Financial Performance of Firms Listed at the Nairobi Securities Exchange | en |
dc.type | Thesis | en |
local.publisher | College of Humanities and Social Sciences | en |