The effects of investment decisions on profitability of companies quoted at the NSE
Abstract
This study sought to investigate the impact of investment decisions on performance of
companies quoted at the Nairobi Securities Exchange. It sought to specifically assess the
impact of investment decisions on profitability of companies quoted at the Nairobi
Security Exchange; as well as to ascertain the nature and strength of the relationship
between investment decisions and profitability of companies quoted at the NSE.
The study adopted a descriptive survey design that is appropriate to researches seeking to
describe the characteristics of firms quoted at the NSE, estimate the proportion of firms
with distinct characteristics, and make predictions. The population this study consisted of
all forty (40) companies listed at the Nairobi Securities Exchange as at 31st December
2012. From the population that is the companies quoted at the Nairobi Securities
Exchange, the researcher analyzed the data extracted from annual reports and accounts
for the period (2007-2012) quoted companies as at 31st December 2012. The researcher
used secondary data to carry out the study. Secondary data was beneficial to the study
because the researcher obtained the relevant data from annual reports and accounts for
the defined period for the quoted companies at the Nairobi Securities Exchange. Simple
regression analysis was then performed to establish the relationship between investments
and performance.
The study found out that there was a positive relationship between the invested amounts
and performance (profitability) of the listed companies. This is to mean that with
increased decisions on investments the companies would perform better. The study
recommends that there is need for the companies to evaluate the various investments
options available so as to ensure that the project chosen will give maximum value;
decision makers in the companies should also weigh up risk involved in the projects
chosen so as to provide the most suitable rewards for stakeholders including shareholders
and customers.
Citation
Master Of Business Administration (mba) School Of Business, University Of Nairobi,2013Publisher
University of Nairobi. School of business,