Ownership Structure and Financial Performance of Companies Listed at the Nairobi Securities Exchange, Kenya
Loading...
Date
2021
Authors
Nzuki, Nathan Mwaka
Njoka, Charity
Journal Title
Journal ISSN
Volume Title
Publisher
IJCAB Publishing Group
Abstract
Performance of firms is predominantly contingent on the deliberate decisions cautiously made
and executed by the owners therefore a linkage exists between ownership structure and
performance financially. Owners are part of a segment that makes decisions by the virtue of their
relationship with the firm. Through the period 2014 to 2018, there was an increase in the listed
firms that issued profit warnings with others like Kenya Airways and Uchumi Supermarket
running into huge financial losses. This research aimed at establishing the relationship between
structure of ownership on company’s performance financially and was anchored on two explicit
objectives: to ascertain whether institutional local ownership impact on financial performance
and to evaluate whether managerial ownership impact on financial performance. This exploration
was built on, stewardship, Agency and stakeholder theories which expound an association of
structure of ownership and performance financially of all Kenyan listed firms through 2014 to
2018. The examination adopted a causal research design. A census of the 60 listed firms was
drawn in this study. Secondary data relating to ownership structure and return on assets was
collected using secondary data collection sheet. Panel regression model was utilised to ascertain
the relationship between the predictor and dependent variables. The effect of Institutional local
ownership on Return on assets is significant as shown by the p values of 0.007. Managerial
ownership was found to have an insignificant impact on Return on assets as shown by the p values
of 0. 611.The study recommended that in pursuit for high Return on assets firm can come up with
incentives to encourage institutions to invest more in the company to raise performance.
Description
An Article Published in International Journal of Current Aspects in Finance, Banking and Accounting
Keywords
Ownership Structure, Institutional Local Ownership, Managerial Ownership, Financial Performance