| dc.description.abstract | The return of any firm is a product of the interaction of various factors with different
contribution towards the returns. This study was designed with the aim of establishing the
determinants on financial performance in Class “A” construction companies in Nairobi County.
The study was a descriptive study on 16 of 48 registered companies using time series data for
the five years from 2008 to 2012.
A regression model was used to determine the relationship between returns of the companies
and four factors, namely, interest volatility, working capital, growth and age. However, due to
the nature of the data, age was regressed with return on assets of each company on a crosssection
basis, unlike the other variables which were done on time series basis per company. The
level of accuracy of the regression analysis was at 95% confidence level. The significance of the
constant terms and the coefficient from the regression was tested using the t-test; the
significance of the regression model was done using the F-test; correlation was tested using the
Pearson’s correlation coefficient, while the coefficient of determination was used to determine
how much variation in return was explained by variation in the independent variables.
The results show that age of the companies had a significant and positive effect on return.
However, the regression analyses per company showed no statistically significant relationship
between return and interest volatility, working capital and growth. The study consequently
recommends putting in place policies to make these companies competitive irrespective of their
age in order to make the road construction business competitively cheaper without
compromising quality. | en |
