Firm Characteristics and Financial Performance of Manufacturing and Construction Allied Firms Listed in Nairobi Securities Exchange, Kenya
Mwendwa, Grace M.
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A company's financial performance reflects its efficient combination of policies, operations, and characteristics to achieve a competitive advantage and also shows how much of a company's income it pays out to investors. In the past, firm characteristics have not been extensively considered major influencers on how various firms perform either in service delivery or financially. The current research's objective was to examine the effectsfirm attributes had on manufacturing and allied as well as construction companies listed on Nairobi Securities Exchange financial performance. This research's main goal was the examinationof the effects firm attributes had on manufacturing and construction companies' financial performance. This research projects’particular objectives were; to examine the effectasset structure had on the NSE-listed companies'returns on investment,to examine the effect financial leverage had on the NSE-listed companies' returns on investment, and to examine the effect liquidity had on the NSE-listed companies' returns on investment. This Research reviewed theories were liquidity preference, trade-off, and pecking order. A descriptive research design was used in this research in describing the characteristics of the phenomenon being studied. The study's targetpopulation was nine manufacturing as well as five construction and allied NSE-listed firms. Data on the financial statements were obtained from the various company websites and the NSE website. Diagnostic testing precededdata analysis for data reliability and validity determination, which included; bi-variate correlation analysis, Multicollinearity tests, normality tests,unit root tests, heteroskedasticity tests, autocorrelation test and Haussmann specification tests. Results from the data analysisindicated that assets structure had a significant negative correlation with firms' financial performance in the manufacturing and allied firms. In contrast,it was observed that asset structure had an insignificant positive correlation with the firms' financial performance for the construction and allied firms. The study's results also indicated that the leverage ratio had a significant negative correlation with the financial performance of manufacturing and allied firms. For the construction and allied firms', financial leverage had an insignificant positive correlation with the financial performance.Liquidity had an insignificant negative correlation with the manufacturing and allied firms'performance, while for the construction and allied firms, financial performance correlation with liquidity was positive and significant.The study recommended that further Research be carried out in the same sectors and the other listed ones to capture firm attributes' effects on financial performance.