dc.description.abstract | The purpose of this study was to establish the relationship between agency costs and
financial performance of firms listed at the Nairobi Securities Exchange.
Descriptive study was applied; the target population was all the companies in the NSE
that traded continuously within the period of 5years for the year 2008 to 2012. A census
was used for the firms. 52 companies were analyzed since the rest were suspended from
trading at the NSE.
The study was a research which utilized secondary data from companies listed in Nairobi
Securities Exchange. Multiple regression analysis and correlation analysis was used to
determine relationship between agency costs and financial performance at the NSE.
Statistical Package for Social Sciences (SPSS) was used in the data analysis.
The results of the study indicated that there is a positive relationship between agency costs
and financial performance, when agency costs increases by one unit, financial
performance increases by 0.02 units.
The study also found that there was no multicollinearity and autocorrelation among all
the variables tested. Finally a positive slope graph was obtained showing a positive
relationship between financial performance and agency costs.
This study concluded that the relationship between financial performance and agency
costs was significant at the 5% level. The study recommended that since agency costs and
financial performance are significantly related, decisions should take into account the
implications of agency costs for the firms listed in NSE when taking financial decisions. | en_US |