Relationship Between Capital Structure and Financial Performance of Investment Companies Listed at the Nairobi Securities Exchange

Abstract

The examination attempted to take a gander at the association between capital structure and cash related execution of venture associations cited at the Nairobi securities trade. To accomplish this, the investigation concentrated on the accompanying explicit destinations; to decide the impact of obligation on money related execution among recorded venture organizations in Kenya; to establish the effect of equity, share capital on financial performance among the listed investment companies in Kenya; and to examine the effect of debt-equity ratio on financial performance among the listed investment companies in Kenya. The examination focused on the five (5) investment organizations quoted at NSE which are; Centum Investment, Olympia Capital Holdings, Trans Century Ltd, Home Afrika and Kurwitu Ventures. Applying phenomenological approach, the study accumulated profound data and recognitions through inductive, subjective strategies. This was achieved by gathering secondary information from published financial reports for the period between 2011- 2017. Data was analysed and summarized utilizing engaging measurements and relapse investigation. Association examination was used to choose the association between capital structure and the cash related execution of theory associations recorded at the NSE. The examination uncovered that there was variation of monetary execution of venture organizations recorded in the NSE because of variations in obligation value proportion, obligation financing, and value share capital. The investigation found a positive connection between obligation value proportion of speculation organizations recorded in the NSE and budgetary execution of venture organizations recorded in the NSE. The investigation found that the coefficients of the obligation value proportion were a sure sign that a unit change paying off debtors’ value proportion would prompt an expansion in monetary execution of the venture organizations recorded in the NSE. The study recommends that it is basic for the administration of the Investment firms when trying to support the association's resources to comprehend the effect of capital structure on their association's monetary execution and also the expense of assets.