The effect of corporate venture capital on the value of firms listed at the Nairobi securities exchange
The Research study set out to establish the effect of Corporate Venture Capital on the Value of Firms listed at the Nairobi Securities Exchange in Kenya. These were issues of concern to the researcher, companies, investors and to the wider community, given the various changes in the business environment that have taken place in Kenya. Given the ever growing pressure and competitiveness among various companies, companies need to design a way to increase their value and therefore maximize shareholders wealth. One of the strategies of achieving this is engaging in rather risky projects which promises high returns. One of this venture is the CVC which according to the findings showed to increase the firm value by a greater percentage. To explore those issues therefore, secondary data was collected from the annual financial statements of the twenty target firms listed at the Nairobi Securities Exchange from year 2008 to 2012. Corporate venture capital measured by the sum of all venture investment and firm value measured by sum of market capitalization rate and book value of debt was used. The findings were analysed using classical linear regression model and findings tabulated.The findings of this study indicates that CVC (pursuit of new business ideas and markets) has a greater effect in the determination of the firm value throughout the years. This therefore implied that even though CVC is a risky venture, the returns attributed to it are of greater significance to the firms engaging in it. However there existed barriers to undertaking of corporate venture capital due to the bureaucracy in the firms as most companies feared to take risks. The research study was rather broad since CVC is still a new investment concept and has not been embraced well by several companies. The study recommends that there is need for the firms listed at the NSE to adopt strategies that would increase CVC investment.