RP-Accounting and Finance Department

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Executive Reward Structure and Financial Performance of Listed Companies in the Nairobi Securities Exchange, Kenya
(Stratford, 2022-07) Nzunga, Dennis Joseph; Koori, Jeremiah; Kimutai, Caroline
Studies have reported positive and significant relationship,that is, positive relationship between executive fixed pay, cash bonus, stock options and company’s financial performance; others negative and significant relationship, while others no significant relationship. In view of...
A Survey of Private Equity Investments in Kenya
(European Journal of Business and Management, 2014) Gatauwa, James M.
Private equity investments in the recent past have been very strong and using leverage to make deals has accelerated sharply as well in both developed and emerging economies. Therefore, private equity is a suitable alternative in financing organizations at their various stages of growth. Hence, this study uses an exploratory approach to establish the extent to which private equity investments are adopted by firms, the forms of private equity mostly applicable and the exit strategies of private equity funds. Primary data was collected using a questionnaire as the main primary data collection tool. The findings show that banks and development financial institutions are the top investors in private equity funds and large corporate companies are the top clients in adoption of private equity followed by SMEs while listed companies are the lowest adopters of private equity.
Synergistic Effects and Financial Performance of Kenya Agricultural and Livestock Research Organization
(IJRISS, 2024-06-22) Okuku, Washingtone Oluoch; Ndede, Fredrick W.S.
This paper explores the synergistic effects and financial performance of KALRO, which is one of the State Corporations in Kenya. It envisaged finding out whether there is a strong relationship between operating and financial synergies and KALRO’s financial performance using primary and secondary data. A sample of 32 respondents were selected using stratified random sampling from key management personnel. Structured questionnaires were administered to gather information, which was analyzed on SPSS Statistics version 25.A pilot study was used to test for the validity of the study to know whether the questions were aligned with the study hypotheses. The findings revealed that synergy gains had a bigger influence on the performance of KALRO. The operating synergy was found to have a significant positive influence on KALRO’s performance (Adjusted R2 = 0.695; p = 0.024), while financial synergy had an insignificant negative influence on KALRO’s performance (Adjusted R2 =0.185; p =0.218). Government policy was found to have a significant mediating effect between synergistic gains and performance of KALRO. The limitation of this research was the smaller sample size, thus, a comprehensive research was recommended to determine the synergy spread in all 16 KALRO institutes and centers
Bank Characteristics and Financial Performance of Commercial Banks Listed at The Nairobi Securities Exchange in Kenya
(EdinBurg, 2023-11) Cherwon, Samson; Ndede, Fredrick W.S.
Commercial banks in Kenya have recently experienced a steady downturn in their financial performance, mostly as a result of strict regulatory requirements and a changing business environment. The subpar financial performance of numerous lower-tier banks has resulted in significant consequences, including the necessity of placing some of these banks under receivership. The purpose of this study was to look into how various factors influence the financial performance of commercial banks listed on the Nairobi Securities market. In particular, this study looked to see how financial performance was impacted by asset quality and liquidity management. The study employed a descriptive methodology and a target population comprised of 11 commercial banks listed on the NSE were included in the population sample for this study. Secondary data was collected and analyzed using descriptive and inferential statistics. The research exhibited that the financial performance of commercial banks is significantly influenced by quality of their assets. Furthermore, the study revealed a positive and statistically significant impact of liquidity on the financial performance of Kenyan commercial banks The study concluded that financial performance was substantially and positively impacted by the quality of assets and liquidity management practices. Consequently, it is recommended that banks maintain a low level of nonperforming loans, as these loans have adverse effects on bank profitability, which in turn affects overall financial performance. Although the statutory ratio is established at 20%, the central bank might think about increasing this ratio by taking into account the general growth of the banking industry in recent years.
Interest Rate Capping and Performance of Nairobi Securities Exchange, Kenya
(uonbi, 2024-06-17) Musungu, Andrew Masinde; Korir, Julius; Abdul, Farida
This studied the effect of interest rate capping on the performance of Nairobi Securities Exchange in Kenya after the adoption of the Banking Amendment Act (2016) following the Banking Amendment Act (2016). The new law imposed regulations lending rates on interest rates charged by commercial banks and interest rates applied on savings rate applicable on customer savings in commercial banks. The effect of lending rates, Treasury bills rates and savings rate on performance of Nairobi Securities Exchange in Kenya were the specific objectives of the study. The moderating effect of the volume of credit on the relationship between interest rate capping and the performance of Nairobi Securities Exchange in Kenya was also considered. Classical Theory of Interest Rates, Fisher’s Theory, the Arbitrage Pricing Theory and the Efficient Market Hypothesis were used in the study. Positivism philosophical views and explanatory design were employed. All the 20 firms which yield the Nairobi Securities Exchange (NSE) 20 Share Index constituted the target population. The census sample design approach was used to collect the secondary data. The study performed diagnostic tests, including the test for autocorrelation, homoscedasticity, multicollinearity, normality, model specification and model stability. Tests for time series properties, stationarity and cointegration were conducted. Furthermore, model specification and model stability checks were also performed, after which data was analyzed by use of Autoregressive Distributed Lag Model to find out the long run relationship and Autoregressive Distributed Lag Error Correction Model to establish the short term relationship. From the results, it was evident that interest rate capping affects performance of Nairobi Securities Exchange in several ways. It was generally concluded that interest rate capping affects performance of Nairobi Securities Exchange in Kenya. It was concluded that interest rate capping has an effect on the performance of Nairobi Securities Exchange in the long run. Lending rates had no effect on the performance of Nairobi Securities Exchange in the long run. Conversely, lending rate had a negative impact on the performance of Nairobi Exchange in the short run. It was, however, observed that Treasury bill rates did not affect the performance of Nairobi Securities Exchange in the long run. However, there existed a negative relationship between Treasury bill rates and the performance of Nairobi Securities Exchange in the short run. Availed by banks be an inverse moderator of the relationship in the long run. However, volume of credit creates a positive moderating relationship between interest rate capping and the performance of Nairobi Securities Exchange. In conclusion, it’s recommended that Central Bank of Kenya should refrain from reducing lending rates since it results into a decrease in prices of stocks, thus locking away prospective investors and curtailing economic growth.
Rotating Savings and Credit Associations and Growth of Women Owned Micro Small and Medium Enterprises, in Bomet County, Kenya
(IJMSSSR, 2024-06) Serem, Ruth Chepkemoi; Jagongo, Ambrose
: Small and medium-sized enterprises (SMEs) form the backbone of economies worldwide, comprising over 90% of businesses and playing a pivotal role in employment and value addition, particularly in nonagricultural sectors. In Kenya, this sector has been instrumental in sustaining livelihoods for millions, spanning both formal and informal economies. Despite their significance, SMEs often grapple with limited access to credit, a challenge exacerbated by perceived riskiness from the banking sector, attributed to the inherent opacity of smaller enterprises compared to their larger counterparts. Interestingly, they emerge as crucial lifelines, especially for women-owned businesses, offering alternative avenues for capital accumulation. However, despite the acknowledged importance of SMEs, research on their growth hurdles yields conflicting results, underscoring the need for a nuanced understanding. Therefore, this study sought to establish the effect of The Role of Rotating Savings and Credit Associations (ROSCA’s) to the growth of women owned Micro small and medium enterprises (MSME’s) in Bomet County, Kenya. The study adopted descriptive survey design. The target population was 270 registered and active women owned Micro Small and Medium Enterprises and a sample size of 135 was used. The study used both semi-structured questionnaire and data collection sheet to collect data. The data was analyzed using descriptive statistics and inferential statistics. The findings from data analysis indicated that lending policies have no statistical significance effect on the growth of women owned businesses (p-value= 0.020 > 0.05). The findings from the testing of literacy level of members on growth women owned businesses indicated there there exists a positive effect (β = .895, p <.05). Guided by the findings a number of recommendations were made. Rotating Savings and Credit Associations (ROSCA’s) should devise strategies on how they can save some funds for investments in income generating projects, this way members can increase their income pool. Lastly, ROSCA’s should engage in training its members on financial management as it was noted to be a significant factor in influencing the growth of women owned Micro small and medium enterprises.
Bank Characteristics and Financial Performance of Commercial Banks Listed at The Nairobi Securities Exchange in Kenya
(edinburg, 2023-11) Cherwon, Samson; Ndede, Fredrick W.S.
AbstractCommercial banks in Kenya have recently experienced a steady downturn in their financial performance, mostly as a result of strict regulatory requirements and a changing business environment. The subpar financial performance of numerous lower-tier banks has resulted in significant consequences, including the necessity of placing some of these banks under receivership. The purpose of this study was to look into how various factorsinfluencethe financial performance of commercial banks listed on the Nairobi Securities market. In particular, this study looked to see how financial performance was impacted by asset qualityand liquidity management. The study employeda descriptive methodologyand a target population comprised of 11 commercial banks listed on the NSE were included in the population sample for this study. Secondary data was collected and analyzed using descriptive and inferential statistics. The research exhibited that the financial performance of commercial banks is significantly influenced by quality of their assets. Furthermore, the study revealed a positive and statistically significant impact of liquidity on the financial performance of Kenyan commercial banksThe study concluded that financial performance was substantially and positively impacted by the quality of assetsand liquidity management practices.Consequently, it is recommended that banks maintain a low level of nonperforming loans, as these loans have adverse effects on bank profitability, which in turn affects overall financial performance.Although the statutory ratio is established at 20%, the central bank might think about increasing this ratio by taking into account the general growth of the banking industry in recent years
Firm Characteristics and Financial Performance of Commercial Banks Listed On the Nairobi Securities Exchange
(IOSR-JEF, 2021) Muema, Festus Mutinda; Abdul, Farida
Commercial banks be key financial service providers and based on which firm characteristics the management of each bank adopts, their financial performance has been observed to vary. The current research paper sought to interrogate the influence firm characteristics had on Nairobi Securities Exchange listed commercial banks' in Kenya financial performance. This study’s main intent was to examine how firm characteristics influenced NSE listed commercial banks' financial performance. This research’s specific intents was: to examine what effect the five selected firm characteristics have on Kenyan commercial banks performance, which include liquidity, leverage, solvency, asset structure, and the moderating effect of interest rate. This study was anchored on the pecking order, trade-off, and liquidity preference theories. The study adopted a causal research design that identifies the range as well as the description of the effect and cause of a correlation as well as the patterns of relationships between study variables. All the NSE-listed Kenyan commercial banks were the target populace. Statistical data of the financial statements were obtained from NSE and the CBK website. The study adopted a time scope of 7 years ranging from 2014 to 2020. Various diagnostic tests such as bivariate correlation analysis, normality test, Hausman specification test, multicollinearity test, and heteroscedasticity were carried out for the determination of the data reliability and validity. The descriptive statistical analysis acted as the tool for data analysis with the help of regression models. Results from the statistical analysis indicated a statistically significant correlation between liquidity, solvency, and asset structure, with the financial performance of Kenyan NSE listed commercial banks. Leverage on the other hand was observed to have an insignificant influence on performance. The rate of interest is also observed to have a significant influence on the correlation betwixt firm attributes and financial performance. This research suggests that central bank as a regulator of the commercial banks in Kenya to make use the results from the study to come up with regulations that are not too unfair to the banking institutions and that are based on the current business climate in the country. The Government can also use results from this study to set up stipulations that can help improve the operations of the banking sector to address the financial performance indifferences being experienced within the banking industry.
Liquidity Risk Premium and Loan Performance of Non-Listed Commercial Banks in Kenya
(IJCAB, 2018-05) Kamau, Joseph Mwangi; Mungai, John Njang’iru
Loans performances are widely associated with the liquidity risk premium which is usually charged by the banks. Liquidity risk premium which is charged on loans can lead to success or financial crises of non-listed commercial banks in Kenya. Due to the nature of their business, non-listed commercial banks usually expose themselves to liquidity risks. Loans performance usually determines the conditions to which it improves the economic status and stability in the banking sector. When Non-Performing loans exist, resources are being locked up in unprofitable sector; hence hindering the economic growth, impairing the economic efficiency and hence causing collapsing of banks. In this study researcher carried out the investigation on the effect of liquidity risk premium towards the loan performance of non-listed commercial banks in Kenya. The guiding objectives includes: to establish the influence of liquidity risk premium on loan performance. Literature review was undertaken to strengthen the knowledge on liquidity risk premium variable and the eliciting gaps which are to be filled. The study adopted descriptive research design of All 31 non-listed commercial bank in Kenya were targeted and sampled through census sampling method. Data was derived from secondary data from banks supervisory reports and audited financial reports of all 31 non-listed commercial banks in Kenya. Data analysis was analyzed using the Statistical Package for Social Science programme. Both descriptive and inferential statistics were used. Results from data collected showed that there was a significant relationship between the loan interest factors of liquidity risk premiums on loan performance in non-listed commercial banks in Kenya. Adjustments on cash and cash balance with CBK and amount of loan issued were strong predictors of liquidity risk premium affecting the loan performance. However, regulatory requirements such as statutory reserve requirements or regulated minimum deposit rates lowly contributed to loan performance. The study thus concluded that liquidity risk premium significantly affected loan performance in non-listed commercial banks in Kenya. The study recommends that the non-listed commercial banks should strengthen cash management systems that reduce liquidity imbalance and ensure sufficient reserves in the institution and with central bank of Kenya. They should also apply rigorous policies on loan advances so as loans are awarded to those with ability to repay and mitigate moral hazards such as insider lending and information asymmetry. Arising from this study recommendations were made for further research. A study which will focus on challenges of interest rate capping by the CBK in both listed and non-listed commercial banks in Kenya. Further, a comparative study should be undertaken to establish the effect of the difference between liquidity risk premiums of microfinance institutions on loan performance of commercial bank in Kenya.
The Leverage, Corporate Governance and Income Smoothing in the Firms Listed in the Nairobi Stock Exchange, Kenya
(IJAF, 2024) Irungu, Anthony Mugetha
This study sought to determine the effect of leverage and corporate governance on income smoothing of the firms listed in the Nairobi Stock Exchange, Kenya. The specific objective included; to determine the effect of leverage and corporate governance on income smoothing of the firms listed in the Nairobi stock Exchange, Kenya and to evaluate the effect of leverage on the relationship between corporate governance on income smoothing of the firms listed in the Nairobi stock Exchange, Kenya. The study adopted ex post facto research design. The target population was all the 64 firms listed in Nairobi Securities Exchange. The study found that leverage has a positive and significant effect on income smoothing. The study also found that ownership concentration and CEO duality had a negative and significant effect on income smoothing in the firms listed in NSE. Board size had a positive but insignificant effect on income smoothing in the firms listed in NSE. Generally, corporate governance had a positive and significant effect on income smoothing in the firms listed in NSE. The study also found that leverage does not moderate the relationship between board size and income smoothing in the firms listed in NSE. The study recommends that managers of the firms listed in NSE in Kenya should employ minimal debt level. This is because firms with high level of debt have high income smoothing. In addition, efforts need to be made to decrease financial risk in listed firms system by reducing the large number of nonperforming loans held by local banks. This will minimize the income smoothing in the listed firms
National Health Insurance Fund Financing and Financial Sustainability of National Referral Hospitals in Kenya
(IAJEF, 2023) Biruri, David; Kimutai, Caroline; Mutwiri, Nathan Mwenda
In the backdrop of the rising global burden of diseases, global economic uncertainties, demographic transitions, pandemics and dysfunctional public healthcare system; most National Referral Hospitals in Kenya are struggling to remain afloat. They are highly characterized by diminishing sources of funding coupled with declining hospitals’ net margins and financial reserves. Their preexisting financial vulnerability was exposed during the coronavirus pandemic, which almost pushed the entire public healthcare system into a near collapse. Most of them were in dire need of government emergency bailouts to meet their short-term financial needs. This was exacerbated by delays in hospital reimbursements and diminishing NHIF annual premiums; due to sporadic monthly premiums, misalliance in NHIF capitation tariffs and incessant pull-outs of key NHIF members such as the National Police Service and Kenya Prison Service. This has starved private and public healthcare organizations destabilizing their operations, healthcare financing mix and raising concerns about its impact on financial sustainability of public healthcare organizations offering secondary and tertiary healthcare. It is on this ground that this study strived to investigate the statistical relationship between National Health Insurance Fund financing and financial sustainability of National Teaching and Referral Hospitals in Kenya. The study hinged on the theory of resource dependency and demand for healthcare. It adopted an explanatory research design and a census sampling technique to sample all National Teaching and Referral Hospitals for the period 2019-2021. A generalized least square with random effects was utilized to assess the relationship between National Health Insurance Fund financing and financial sustainability of these hospitals. The panel data was analysed quantitatively using both descriptive and inferential statistics with the aid of Eviews data analysis software. The results from the inquiry indicated that National Health Insurance Fund financing had a positive and significant relationship with financial sustainability. To alleviate healthcare financing disequilibrium and its subsequent impact on financial sustainability of National Referral Hospitals, the study proposed a review and realignment of the current healthcare financing policies, laws, and reforms. The study recommends the establishment of a robust and optimal National Health Insurance Policy and the adoption of innovative sources of financing public healthcare, such as the use of social impact bonds to finance various health programs with severe social impacts like lifestyle diseases. However, more research on social impact bonds is required.
Financial Management Practices and Funds Management in Public Secondary Schools in Kilifi County, Kenya
(IAJEF, 2024-06) Kalume, Seith Baya; Ng’ang’a, Peter
Effective fund management in secondary schools in Kenya and across the world contribute to the economic development of those countries. The handling of funds in many public secondary schools has encountered several obstacles, including instances of mismanagement. Therefore, this brings out the issues on fund management challenges in Kenyan Public Schools. The research was led by the aforementioned precise objective; to establish the effect of budgeting process on fund management in public secondary schools in Kilifi County, Kenya. Research was underpinned by: Stewardship theory of management and Contingency theory. The study utilized a descriptive research design and the target audience was 107 public secondary schools in Kilifi County. Stratified random sampling was utilized to arrive at a sample of 85 respondents. The study utilized primary data which was obtained via a questionnaire where a drop and pick method was adopted. Data collected was scrutinized using SPSS software (version 26) using both descriptive and inferential statistics. Descriptive statistics focused on means and standard deviation and represented in terms of graphs and charts. Inferential statistics sought the relationship between the study variables by running correlation and regression analysis while multiple regression was used to express the contribution of each variable. Further diagnostic tests in terms of normality, multicollinearity and Homoscedasticity was conducted before running multiple regression. Ethical consideration which includes guidelines governing the research was fully followed during the research. The study showed that budgeting process had the significance threshold of p< 0.05 hence had statistically significant effect on fund management of public secondary schools. The study concluded that popular of the responders established to abundant magnitude with the fact that budgeting process indeed affected the fund management of public secondary schools. The study recommended that the schools should involve stakeholders in budget preparation and compare current and previous budgets. It should also ensure approval of budget on yearly basis and ensure adherence on budget estimates. It also recommends frequent monitoring and evaluation of the budget but also ensure they involve the accounting experts.
Working Capital Management Practices and Financial Performance of Manufacturing and Allied Firms Listed at the Nairobi Securities Exchange – Kenya
(IJARKE, 2024-06) Chuol, Manyuon Dhieu; Gitagia, Francis
Manufacturing and allied firms in Kenya play a very important role in economic development. Nevertheless, the companies have seen fluctuations in their financial returns along with a downward trend in their overall performance. The study objective was to ascertain the relationship between working capital management practices and financial health of manufacturing and allied firms listed in NSE. Explanatory research design, cluster random sampling was used in the study. The target population was 9 manufacturing and allied firms listed in the NSE. The research employed secondary data sourced from financial reports as published in the NSE manual and KNBS for the time frame spanning from 2010 to 2020. Panel regression analysis and Pearson’s product moment correlation analysis was employed for inferential analysis while means and standard deviations were utilized for purposes of descriptive analysis. The study concluded that Manufacturing firms should prioritize account receivables management to improve operations and finances, Kenya's listed industrial and allied industries may benefit from improved inventory management, Management considers accounts payable in financial performance, Kenyan listed manufacturing and allied enterprises may benefit from cash management and that Size affects working capital management and financial health of listed industrial and associated enterprises in Kenya. The study therefore recommended that Manufacturing enterprises should have a system that flags early supplier payments and that Manufacturing enterprises should buy qualified raw materials and goods just-in-time.
Current Ratio and Financial Performance of Agricultural Firms Listed at the Nairobi Securites Exchange, Kenya
(JEMT, 2024-02) Odendo, Moses Ambasa; Malgit, Amos Akims; Nyachae, Samuel Moragia; Mbugua, Levi
The significant importance of the Agricultural sub-sector is depicted through its contribution to the economic and social developments of Kenya. The study originates from the Doctoral dissertation of the first author in which the co-authors served as supervisors. A census approach was adopted where secondary data from audited annual financial reports of all the six Agricultural firms listed at the Nairobi Securities exchange, Kenya was used, covering the period 2015 to 2022. Descriptive analysis and panel regression analysis were applied. The findings from the panel regression analysis indicated that current ratio has significant effect on financial performance of the Agricultural firms listed at the Nairobi Securities Exchange, Kenya. The study recommends that agricultural firms listed at the Nairobi Securities Exchange need to increase their current assets holdings for purposes of increasing their liquidity levels. This is due to current ratio positive effect on the financial performance of agricultural firms listed at the Nairobi Securities Exchange, Kenya. However, just as very low current ratio is discouraged for firms, it should notably not to be too high as this will serve as an indication that managers are not efficiently utilizing assets. Managers need to properly assess the short term obligations of their firms so as to ensure a corresponding current ratio is attained. Further researches can be undertaken on current ratio and financial performance relationships in the context of firms in other sectors that are listed at the Nairobi Securities Exchange, Kenya.
Capital Level and Financial Stability of Commercial Banks in Kenya
(EdinBurg, 2024-04) Kilonzo, Alex Mutisya; Atheru, Gerald
The soundness of banks' finances serves as the foundation for the entire financial sector because they are essential to promoting economic growth. A commercial bank's financial stability should be assessed with specific emphasis given to domestic and foreign issues that affect how the bank operates and figuring out the amount of their influence on the status and operations of the commercial bank. Nevertheless, the impact of the company's capital, liquidity, and asset quality on the financial stability of commercial banks has not been studied. This study aimed to evaluate the effect of capital level on licensed commercial banks’ financial stability in Kenya. The research was anchored by capital buffer theory. The explanatory research design was adopted to analyze thirty-nine banks for the period 2016 to 2022 based on the census approach. The study outcomes were arrived at using secondary data obtained under the guidance of the secondary data collection schedule. The assessment of the investigation was evaluated premised on descriptive and panel approaches. The findings indicated that capital level had a positive and significant effect on the financial stability of commercial banks. The study recommended that commercial banks should adopt strategies and measures that will enable them to increase the capital level leading to an increase in financial health.
Transaction Monitoring Effect on Profitability of Commercial Banks in Kenya
(EdinBurg, 2024-05) Terer, Obed Kipkirui; Mwangi, Lucy Wamugo; Omagwa, Job
Commercial banks' performance is fundamental to the economy as providers of financial services. In offering this service, commercial banks are exposed to a range of risks that negatively affect financial position and ultimately influence profitability. Profitability is indicative of a bank's stability and potential for growth. Enhancing commercial banks' profitability contributes to shareholder return on investment. In June 2018, five banks were fined a total of Kshs. 392 million by the Central Bank of Kenya for breaching anti-money laundering regulations. Consequently, banks had to invest resources to improve their antimoney laundering measures. Consequently, raising operational and compliance overheads. This study sought to determine the effect of transaction monitoring on profitability of commercial banks in Kenya. The research employed an explanatory research design. The targeted population comprised all the thirty-nine regulated commercial banks as of December 31, 2021. The study period was eight (8) years (2014 to 2021). Respondents were chosen through purposive sampling. Primary data was gathered using structured questionnaires, while secondary data was derived from audited financial reports of commercial banks and the annual banking supervision report from the Central Bank of Kenya. Subsequently, the collected data underwent analysis employing descriptive statistics and regression analysis. The research results disclosed that transaction monitoring positively and significantly influenced commercial banks profitability. Consequently, bank managers should incorporate transaction monitoring into their operations to augment the overall efficacy to detect and report potentially suspicious activities, and to strengthen operational controls.
Internal Corporate Governance Mechanisms, Regulatory Framework And Financial Performance Of Cross-Listed Companies At East African Community Region
(iosrjournals, 2024-04) Mweta, Titus Mutambu; Jagongo, Ambrose; Mithi, Festus
Purpose of the Study: This study investigated the influence of the regulatory compliance index on the internal corporate governance mechanisms and financial performance interactions. It was based on the ideas of agency, stewardship, stakeholders, and resource dependence theory. Statement of the Problem: Despite EAC region partners investing heavily to improve market infrastructure and promote securities integration, the companies cross-listed in these markets have recorded significant decline in financial performance with dwindling liquidity and profitability evidenced by the increasing number of profit warnings issued, closed operations, securities markets suspensions, mergers & acquisitions, demergers and portfolio restructuring & reorganizations. Methodology: This study was grounded in the positivistic research philosophy. Explanatory non-experimental research design was used. A total of 9 companies cross-listed were picked to form the sample size through purposive sampling. This study employed secondary panel data extracted from the audited consolidated annual reports from 2013 to 2022. Diagnostic tests were performed to validate adherence to the principles of the classical linear regression model. Data was analyzed with descriptive and inferential statistics. The Whisman and McClelland (2005) moderation procedure was employed to investigate the effect of the regulatory framework. Results: The Feasible Generalised Least Squares panel multiple regression analysis yielded significant evidence of a direct connection between independent directors, executive directors' remuneration, executive director's shareholding, and both ROA and Tobin Q. The findings of this study documented that the regulatory framework plays a crucial role in influencing the correlation between executive directors' compensation, executive director's shareholding, and ROA. Nevertheless, the regulatory compliance index does not have a statistically significant effect on independent directors, and ROA correlations. Recommendations: This study proposes as follows for policy; the capital market authorities, central banks, and insurance regulatory authorities should work together to develop, improve and administer the regulations and guidelines on board independence to bolster the significance of board autonomy, boost transparency, enhance decision-making, and protect shareholders' assets
Revenue Collection Strategies and Financial Sustainability of Water Services Providers in Kenya: A Case Study of Malindi Water and Sewerage Company Limited
(IAJEF, 2024-05) Mulewa, Kingstone Kasena; Kaplelach, Samson
Malindi water and Sewerage Company has failed to collect revenue from 18% of its customers, with revenue collection efficiency being 76% of the budget, non-cost recovery tariff and high non-revenue water losses at 28%. Generally, Malindi Water and Sewerage Company, has been performing poorly over the last two years based on financial sustainability, ranking at position 17 down from position one out of 88 regulated Water Services Providers in the country with a score of 113. The purpose of this Study was to examine the effect of revenue collection strategies on the financial sustainability of Malindi Water and Sewerage Company Limited. The study was anchored on the following specific objective: To examine the effect of revenue generation on the financial sustainability of Malindi Water and Sewerage Company Limited. To underpin the study findings, the study relied on resource dependence theory. Case study research design was adopted in this study. The study targeted 126 company employees out of which a sample size of 96 was drawn. The study used structured questionnaires to collect data from the employees. Further, a pilot study was conducted at Kilifi Mariakani Water and Sewerage Company to determine validity through Kaiser Meyer Olkin and Bartlett Test and reliability through Cronbach Alpha of the research instrument. The data was analysed using Statistical Package for the Social Sciences version 26, which applied both descriptive and inferential statistical approaches. Prior to performing inferential analysis, it was necessary to undertake diagnostic tests. Out of the 96 structured questionnaires distributed to the employees of MAWASCO as per the sample size, 285 questionnaires were returned, this represented 88.5% of the sample size. Revenue generation strategies have a significant, albeit weak, positive effect on financial sustainability (r = .232, p = .033; regression coefficient β = .239, p < .001), the descriptive statistics suggest a general consensus on the importance of these strategies in MAWASCO’s operations. The research aimed to evaluate the impact of revenue generation on the financial sustainability of MAWASCO. The findings from both descriptive and inferential statistical analyses offer a comprehensive understanding of how these factors interact and contribute to the overall financial health of the company. The strong agreement among participants on these aspects, combined with the moderate to substantial correlation and regression coefficients, points to the critical role of revenue diversification in securing MAWASCO’s financial future. The recommendations are grounded in the understanding that a multifaceted approach is crucial for the long-term financial health and stability of the organization.
Venture Capital and Financial Performance of E-Commerce-Driven Firms in Kenya
(IPRJB, 2024-02) Muinde, Victor Mwendwa; Gatauwa, James M.; Mungai, John N.
Purpose: Businesses that rely on e-commerce for growth frequently find that their ability to obtain sufficient capital is critical to their success. Funding from venture capital firms is essential in this context. Due to insufficient capital, e-commerce-driven businesses in Kenya have continuously underperformed financially. Numerous of these businesses, such as Rupu, OLX Kenya, and ePay, encountered financial difficulties and eventually lost the ability to continue operating. This study's main objectives were to evaluate the impact of capital management support, financing options, and cost of capital on the financial performance of Kenyan e-commerce businesses. Additionally, the study sought to fully evaluate the moderating impact of regulatory structure on venture capital funding and the financial performance of Kenyan e-commerce-driven firms. The trade-off, stakeholder, financial liberalization, and agency theories all lend credence to this research. The research philosophy of positivism, which emphasizes the use of empirical data to evaluate theories and hypotheses, was applied to perform this study. Methodology: The study examined a population of 45 e-commercedriven businesses that obtained venture capital financing between 2017 and 2022 using a descriptive cross-sectional survey research approach. A stratified simple random sampling design technique was employed to choose 45 e-commerce-driven businesses as a sample. Surveys were distributed to collect primary data. Important stakeholders, including investors, executives, and founders, were among the participants in the study. Descriptive statistics were employed to summarize the data, such as measures of central tendency (particularly the mean), variability (expressed by the standard deviation), and frequency distributions. Regression analysis, an inferential statistic, was also employed in the study to investigate the relationship between venture capital funding and financial success. The gathered data were coded before entering into the Statistical Package for Social Science (SPSS) program to make the analysis process easier. The analysis's final results were provided as tables. Findings: The findings showed that the cost of capital, financing strategies, and capital management support significantly impact Kenyan e-commerce enterprises' financial performance. The aggregate score of 3.73 in cost of capital indicated consensus among participants on the impact of venture capital on e-commerce companies' financial performance. Participants perceived a significant correlation, with a standard deviation of 1.15 reflecting varying opinions. Most agree that lower venture capital costs lead to better financial success, influencing organizations' financial decisions significantly. The study concluded that venture capital funding has a considerable impact on the financial performance of e-commercedriven enterprises in Kenya. The report advised management to thoroughly understand the total cost of capital related to venture capital funding. Unique Contribution to Theory, Practice and Policy: The study on venture capital and financial performance of e-commerce-driven firms in Kenya has made significant contributions to theory, practice, and policy. It has enhanced theoretical understanding by examining the relationship between venture capital investments and the financial performance of e-commerce firms, providing insights into the dynamics of these markets. In practice, the study has offered valuable guidance to e-commerce entrepreneurs and investors by identifying factors that influence financial performance and informing strategic decision-making. Additionally, the findings have implications for policy formulation, as they highlight the importance of fostering an enabling environment for venture capital investments in the ecommerce sector to spur economic growth and innovation in Kenya.
Regulatory Framework Effect on the Nexus between External Corporate Governance Mechanisms and Financial Performance of Cross-Listed Companies at East African Community Region
(AJOEI, 2024-04) Mweta, Titus Mutambu; Jagongo, Ambrose; Mithi, Festus
Purpose of the Study: The general objective was to investigate the regulatory compliance index effects on the external corporate governance mechanisms and financial performance interactions. It was based on the ideas of agency, stewardship, stakeholders, and resource dependence theory. Statement of the Problem: Despite EAC region partners investing heavily to improve market infrastructure and promote securities integration, the companies cross-listed in these markets have recorded significant decline in financial performance with dwindling liquidity and profitability evidenced by the increasing number of profit warnings issued, closed operations, securities markets suspensions, mergers & acquisitions, and restructuring. Methodology: This study was grounded in the positivistic research philosophy. Explanatory nonexperimental research design was used. Through purposive sampling, 9 companies formed the sample size. Secondary panel data extracted from audited annual reports from 2013 to 2022 was used. Diagnostic tests were performed to validate adherence to the principles of the classical linear regression model. Data was analyzed with descriptive and inferential statistics. The Whisman and McClelland (2005) moderation procedure was employed to investigate the effect of the regulatory framework. Results: The Feasible Generalised Least Squares panel multiple regression analysis yielded a significant relationship between the corporate block holding and ROA however there was no statistically significant association between corporate block holding and Tobin Q. The study also discovered a statistically significant association between product market dominance and ROA. Independent auditors demonstrated an inverse relationship with ROA, while their connection with Tobin Q was not statistically significant. The findings of this study documented that the regulatory framework moderates the correlation between independent auditors, product market dominance, and ROA and does not have a statistically significant effect on corporate block holding and ROA correlations. Recommendation: This study proposes that market policy makers should work together to develop and administer the regulations and guidelines on board independence to bolster the significance of board autonomy and boost transparency to improve decision-making.

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