Effect of Foreign Exchange Transaction Risk Management on Financial Performance of Firms in Horticulture Industry in Kenya
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Date
2022
Authors
Dae, Abdu Godana
Wamugo, Lucy
Journal Title
Journal ISSN
Volume Title
Publisher
Stratford Peer Reviewed Journals and Book Publishing
Abstract
In Kenya, the horticulture industry is a big revenue earner with the sector earning the country
foreign exchange by exporting their products to various countries overseas. However, in the
preceding five years to the study, horticultural firms had steadily declined hindering their
sustainability and contribution to the economy. The purpose of the study was to determine the
effect of foreign exchange transaction risk management on financial performance of firms in
horticulture industry in Kenya. To accomplish the objectives, the study employed an explanatory
research design to analyse several horticultural enterprises at a certain point in time. Primary data
were obtained through a questionnaire that included questions that were both closed and openended, while secondary data were acquired using schedule tables. The population of interest for
this study was 63 horticultural enterprises in Nakuru County. Due to the study population's small
size, a census of all 63 enterprises was done. After collecting data, Statistical package for social
sciences (SPSS) version 21 was used to derive descriptive statistics and conduct multiple linear
regression analysis. The averages and standard deviation were determined using descriptive
statistics, and multiple linear regression analysis was applied to test the study's hypotheses. After
that, the output was summarized in reports and frequency tables. The findings revealed transaction
risk management having a significance value of 0.000 and a coefficient of 0.533. The significance
value of 0.000 was less than the standard 0.05 which implied that foreign exchange transaction
risk management had a noteworthy influence on ROCE value at 95 percent confidence level. The
study concludes that foreign exchange transaction risk management has an influence on
profitability of horticulture firms in Kenya. The study thus recommends that the senior
management in the horticultural businesses should enter into a variety of forward contracts and
options to enable them to manage this risk effectively and have the expected positive effect on
their ROCE.
Description
Article
Keywords
Foreign Exchange, Transaction Risk Management, Horticulture Industry, Financial Performance
Citation
Dae , A. G. ., & Wamugo, L. . (2022). Effect of Foreign Exchange Transaction Risk Management on Financial Performance of Firms in Horticulture Industry in Kenya. Journal of Finance and Accounting, 6(2), 88–101.