Capital Structure Formation and Investment Performance of the General Insurance Companies in Kenya
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Date
2020-09
Authors
Karakacha, Toloi Moses
Ndede, Fredrick W.S.
Journal Title
Journal ISSN
Volume Title
Publisher
Research Publish Journals
Abstract
: This study sought to investigate the effect of capital structure formation on investment performance of
the general insurance companies in Kenya. The study was anchored on the pecking order, trade-off and agency
cost theories. Firm size tested the moderation effect in the relationship. The descriptive research design was
employed whereas the panel regressions and correlation analysis tested the relationships strength and direction in
the study models. The study target population comprised of seventy-two insurance companies. The sample
consisted of thirty-nine general insurance companies purposively sampled. Secondary data was collected using
customised schedules. The study revealed that long-term debt had a significant positive effect on return on assets
whereas it showed a significant negative relationship with return on equity. The total debt had a significant
negative relationship with the return on assets and equity. The total equity had a significant negative relationship
with the return on equity. The firm size had a positive moderating effect on the return on assets and equity. The
study recommended the use of long term debt to achieve improved investment performance. Further studies
focusing on life and composite insurance companies can use longer period panel data on short term debt and staff
productivity to facilitate comparisons
Description
A Research Article in the International Journal of Management and Commerce Innovations
Keywords
Capital Structure Formation, Long-term debt, Total Debt, Total Equity, Firm Size, Investment Performance
Citation
MOSES, K. T., & NDEDE, F. W. (2020). CAPITAL STRUCTURE FORMATION AND INVESTMENT PERFORMANCE OF THE GENERAL INSURANCE COMPANIES IN KENYA (Doctoral dissertation, KENYATTA UNIVERSITY).