Financial Risk, Firm Size and Financial Distress, Turbulent Times for Firms Listed at the Nairobi Securities Exchange, Kenya

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dc.contributor.authorWalela, Elias
dc.contributor.authorOmagwa, Job
dc.contributor.authorMuathe, Stephen
dc.date.accessioned2023-06-12T12:31:56Z
dc.date.available2023-06-12T12:31:56Z
dc.date.issued2022
dc.descriptionArticleen_US
dc.description.abstractIn Kenya, at least 6 listed firms became insolvent and got into liquidation over a period of 10 years (2009-2018) leading to loss of income, unemployment and other negative outcomes. Hence, the financialstability ofthe existing listed firmsshould be examined closely since the firms are expected to be stable at any point in time. Firm Size has been observed to moderate the relationship between various variables and financial distress offirmsthough there is little empirical evidence in developing economies particularly forfirmsthat are listed attheNairobi SecuritiesExchange in Kenya.Hence, an empirical issue that remains is to determine what moderating effect firm size has on the relationship between financial risk andfinancial distressofthe listedfirms.The general objectivewasto investigate the moderating effect of firm size on the relationship between financial risk and financial distress of firmslisted attheNairobi Securities Exchange, Kenya for the period 2009-2018. This study was based on Wreckers theory of financial distress, Trade off theory, Distress theory, Early Bankruptcy theory and the Altman’s Z-Score Model for financial distress. The study adopted positivism research philosophy and explanatory and descriptive research designs. The targeted population entailed all 66 firms listed at the Nairobi Securities Exchange, Kenya as at 2018. Time Series Cross-Sectional secondary data was analyzed. The following diagnostic tests were carried out before delving into data analysis: Tests for Multicollinearity, Outliers, Heteroscedasticity, Autocorrelation, Linearity, Goodness of Fit, Stationarity and Model Specification. Data analysis was done using descriptive statistics and inferential statistics using Binary Logistic regression model.ThefindingsindicatethatFirmsize indeed moderates the relationship between financial risk and financial distress of firms listed at the NSE, Kenya at5%significance levels.Optimalfirmsizesshouldbe setupforlistedfirmstomanage financial distress.en_US
dc.identifier.citationWalela, E., Omagwa, J., & Muathe, S. (2022). Financial Risk, Firm Size and Financial Distress: Turbulent Times for Firms Listed at the Nairobi Securities Exchange, Kenya. Advanced Journal of Social Science, 10(1), 88–102. https://doi.org/10.21467/ajss.10.1.88-102en_US
dc.identifier.urihttps://doi.org/10.21467/ajss.10.1.88-102
dc.identifier.urihttp://ir-library.ku.ac.ke/handle/123456789/25773
dc.language.isoenen_US
dc.publisherAIJRen_US
dc.subjectFinancial Risken_US
dc.subjectFirm Sizeen_US
dc.subjectFinancial Distressen_US
dc.titleFinancial Risk, Firm Size and Financial Distress, Turbulent Times for Firms Listed at the Nairobi Securities Exchange, Kenyaen_US
dc.typeArticleen_US
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