The Relationship Between Financial Performance For Multinational Corporations In Kenya And Exchange Rates Volatility
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Date
2011Author
Kipchirchir, Shadrack K
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Exchange rate is a vital mieroeconomic variable and backbone of international Trade. A
variation of exchange rate plays an important role in determination of balance of trade.
The exchange rate regime determines the ability of the economy to effectively respond
and adjust to exogenous shocks. Besides the exchange rate movement influence exports
and imports of goods and services which are key macroeconomic variable for these
reasons it is necessary to have an appropriate model of the exchange rate that reflect the
underlying economic factors. Exchange rate which is one of the variables that affect the
profitability of a firm especially the ones that deal with foreign trade, if not well managed
can render a firm to major shocks of profit deterioration. The objective of this study was
to establish the relationship between financial performance for multinational corporations
in Kenya and exchange rates volatility. The researcher used analytical research design in
collecting the data from respondents. The population for this study included all MNCs
quoted on the NSE by December 2010. The MNCs listed on the NSE were chosen upon
because of the case availability of data on their performance. From the NSE handbook
manual, there were 16 MNCs listed on the Nairobi Stock Exchange.
The study used secondary data for five years starting from the year 2006 to 2010. The
data collected was analyzed by use of Microsoft Excel and Statistical Package for Social
Sciences (SPSS) Version 17. The study found out that, there were several factors
influencing the financial performance of MNCs listed in the NSE, which are Sterling
Pound Exchange Rate, United States Dollar Exchange Rate, Euro Exchange Rate and
Japanese Yen Exchange Rate. They either influenced it positively or negatively. 1'he
study concludes that Sterling Pound Exchange Rate, United States Dollar Exchange Rate.
Euro Exchange Rate and Japanese Yen Exchange Rate influence the financial
performance exchange rate.
The study deduced that leverage negatively influenced the financial performance
exchange rates. The study also concluded that Euro Exchange Rate positively influences
the financial performance. The study also revealed that Japanese Yen Exchange Rate is
positively related to the financial performance. Since the study established that Sterling
Pound Exchange Rate have a significant influence on the financial performance, the
managers of the companies should concentrate their efforts towards allocating more
funds to buying and selling Sterling Found. This approach means making decisions and
means taking control of a large risk area that affects a corporation. The study established
that firms' decision making could impact on financial performance because it takes
control of a large risk area that affects a corporation.
Publisher
University Of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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