Effects of Ownership Structure on Financial Performance of Manufacturing Firms Listed at the Nairobi Securities Exchange, Kenya
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Date
2024-11
Journal Title
Journal ISSN
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Publisher
International Academic Journal of Economics and Finance
Abstract
The Manufacturing Sector has been a key
contributor to Kenya’s GDP over the last few
years. However, from the year 2014 to 2023,
the financial performance of manufacturing
firms has been deteriorating as evidenced
from the declining returns on assets of the 9
manufacturing firms listed at the NSE,
Kenya. The ownership structure of a firm
influences the financial performance of the
company because it governs rules and
decision-making processes in all business
activities. The general objective of the study
is to determine the relationship between
ownership structure and financial
performance of the manufacturing firms
listed at the Nairobi Securities Exchange,
Kenya. The specific objectives are to
determine the relationship between
individual, institutional, government, foreign
ownership and financial performance of the
manufacturing firms at the Nairobi Securities
Exchange, Kenya. To determine the
moderating effect of corporate governance on
the relationship between ownership structure
and financial performance of the
manufacturing firms at the Nairobi Securities
Exchange, Kenya. The theories that will be
informing the study are agency theory,
stewardship theory, stakeholder theory and
resource dependency theory. The study will
embrace a positivism research philosophy.
The study will employ a descriptive research
design to cover ten years from 2014 to 2023.
The study target population is all nine
manufacturing firms listed at the Nairobi
Securities Exchange, Kenya where a census
study technique will be used. Only secondary
data will be collected. Panel linear regression
model will be adopted. The collected data will
be analyzed through descriptive and
inferential statistics. Diagnostic tests will be
carried out in this study which will include a
normality test, multi-collinearity test and
heteroscedasticity test. Results of the study
was presented in form of tables and graphs.
Misconducts such as falsifications and
misrepresentation of research work will be
avoided in the course of carrying out this
research study. Data was normally distributed
and there was no multicollinearity. Pearson
correlation posed a positive link between
individual, government ownership and
financial performance whereas institutional,
foreign ownership had a negative association.
Heteroskedacity was absent in the tested
residuals. All the null hypothesis in the study
were rejected. Random effect was the
considered model. Corporate governance had
a positive moderating effect between
ownership structure and financial
performance
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Journal Article
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Citation
Macaria, J. W., Aluoch, M. O., Kosgei, M. (2024). Effects of Ownership Structure on Financial Performance of Manufacturing Firms Listed at the Nairobi Securities Exchange, Kenya. International Academic Journal of Economics and Finance, 4(3), 486-512