| dc.description.abstract | The main objective of the study was to establish the relationship between equity financing and financial performance for firms in the energy and petroleum sector listed at the Nairobi Securities Exchange. The firms listed in the energy and petroleum sector include KenGen ltd, Kenya power ltd, Umeme ltd, Total Kenya ltd, Kenol Kobil ltd. Financial performance of firms using seasoned equity issues has received little attention in Nairobi Securities Exchange studies hence this study will add to the body of existing knowledge. The study was descriptive in nature and the research analyzed the data selected within a specified period of time. The population for the study consisted of the five firms in the energy and petroleum sector listed at Nairobi Securities Exchange from the year 2005 to 2014 period. The sample was the same as the population. The study used secondary data from published audited annual reports of accounts for the sample firms and these were obtained from Nairobi Securities Exchange and Capital Market Authority. Financial data from balance sheets, profit and loss accounts and cash flow statements were used to calculate and analyze return on equity which is the dependent variable, while growth opportunities; firm size, liquidity ratio and equity ratio are independent variables. The study used a regression model to analyze the relationship between equity financing and financial performance of the firms. Control variables namely growth opportunities, liquidity ratio, and firm size were used in the regression model. F-test was used to determine the fitness of the regression model in analyzing the relationship. The coefficient of determination was used to explain how much of the variations in financial performance were explained by equity financing. The results of the study showed an insignificant but positive relationship between equity financing and financial performance. The study also showed a significant positive relationship between financial performance and growth opportunities and equity ratio. It can be concluded that firms which invest resources towards increasing growth in asset base show greater improvement in financial performance. Equity financing are important especially as far as raising capital for growth, expansions or acquisitions is concerned. The study recommends that firms to use equity financing in increasing asset base and growth since this translates to improved financial performance. Policies regarding equity issues should be reviewed and made flexible to encourage firms to participate in equity issues. The study concentrated on listed firms whose findings cannot be generalized for all firms’ hence further studies can be to include non listed firms to compare the findings. | en_US |
