INFLUENCE OF CAPITAL STRUCTURE ON FINANCIAL PERFORMANCE OF CONSTRUCTION AND ALLIED FIRMS LISTED IN NAIROBI SECURITIES EXCHANGE IN KENYA
DOI:
https://doi.org/10.47941/ijf.904Keywords:
long-term assets ratio, debt to assets ratio, debt to equity ratio, equity to capital ratioAbstract
Purpose: The overall objective of this study was to examine the influence of capital structure on financial performance of construction and allied firms listed in Nairobi Securities Exchange in Kenya.
Methodology: This research study adopted a descriptive research design approach. The researcher preferred this method because it allowed an in-depth study of the subject. Structured questionnaires were used to collect data. The target population of this study was the five (5) construction and allied firms listed at the Nairobi Stocks Exchange in Kenya as per the NSE Directory 2021. The unit of analysis was the individual construction and allied firms, while the unit of observation was the one hundred and seventy-two (172) employees in finance departments and operations departments in each of the five (5) construction and allied firms listed at the Nairobi Stocks Exchange. Data was analyzed using descriptive and inferential statistics. Quantitative data was analyzed using multiple regression analysis. The qualitative data generated was analyzed by use of Statistical Package of Social Sciences (SPSS) version 22.
Results and conclusion: The findings demonstrated the important capital structure aspects to financial performance of construction and allied firms listed in Nairobi Securities Exchange to include; long-term assets ratio, debt to assets ratio, debt to equity ratio and equity to capital ratio. The current study obtained an R2 of 64.7% and should therefore be expanded further in future in order to include other capital structure that may as well have a positive significance to performance of construction and allied firms.The findings of the study indicated that long-term assets ratio, debt to assets ratio, debt to equity ratio and equity to capital ratio have a positive relationship with performance of construction and allied firms in Kenya
Policy recommendation: the study recommended that construction and allied firms should embrace optimal capital structure so as to improve financial performance and further researches should to be carried out in other sectors to find out if the same results can be obtained..
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Copyright (c) 2022 ROSA MUKAMI NYAGA, DR. JARED DEYA
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