Firm Size, Operational Risk and Financial Performance: Evidence from Commercial and Services companies listed in Nairobi Securities Exchange
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Date
2019
Authors
Onsongo, Susan Kerubo
Mwangi, Lucy Wamugo
Muathe, Stephen Makau
Journal Title
Journal ISSN
Volume Title
Publisher
IJCAB Publishing Group
Abstract
The study sought to assess the financial performance of the companies listed in the commercial
and services sector at the Nairobi Securities Exchange (NSE), Kenya with an aim of
determining the implications of firm size and operational risk on their performance. It was
anchored on the agency theory. The study applied explanatory research design and the target
population was the 14 companies listed under this sector. Secondary panel data contained in
published annual reports for the year 2013 to 2017 was collected. A panel regression model
was applied with the random effect model being used based on the Hausman specification test.
Findings showed that operational risk had a positive insignificant effect on performance as
proxied by return on assets (ROA). The findings further showed that firm size had a moderating
effect on the relationship between operational risks and performance. It concluded that firm
size played a role in the risk management of a company i.e. companies with higher total assets
managed risk better than their counterpart. The study recommends that for companies to
record improved financial performance, they needed to manage their operational risks by
implementing risk management initiatives and increasing their total assets base.
Description
An Article Published in International Journal of Current Aspects
Keywords
Firm Size, Operational Risk, Financial Performance, Commercial and Services Companies, Nairobi Securities Exchange
Citation
Onsongo, S., Muathe, S., & Mwangi, L. (2019). Firm Size, Operational Risk and Performance: Evidence from Commercial and Services Companies Listed in Nairobi Securities Exchange. International Journal of Current Aspects, 3(VI), 372-379. https://doi.org/10.35942/ijcab.v3iVI.93