The Financing Decisions and Financial Performance of Manufacturing Firms Listed at Nairobi Securities Exchange, Kenya
DOI:
https://doi.org/10.47672/ajf.1836Keywords:
Financing Decisions, Liquidity Decisions, Dividend Decision, Investment Decisions, Financial PerformanceAbstract
Purpose: The main aim of the investigation was to ascertain how financing decisions affect the financial success of manufacturing companies listed on Kenya's Nairobi Securities Exchange.
Materials and Methods: This study's methodology was a descriptive research plan. Ten manufacturing companies are listed on the NSE. 10 manufacturing organizations that were listed on the Nairobi Securities Exchange in Kenya as of December 31, 2021, made up the study's population. Because they have regularly been listed at NSE since 2012 without skipping a year, the 10 firms were targeted. The companies that are not listed in any given year between 2012 and 2021 was not taken into account by the study. Therefore, the study involved all 10 manufacturing companies. Since every company was listed throughout the time of this study, none was omitted. The researcher uses a document review checklist during the data collection to gather secondary information for use in compiling and analyzing the financial statements. Panel data made up of time series and cross sections was considered secondary data. The data that was collected was between 2012 and 2021.
Findings: Outcomes depicted that liquidity decision had a satisfactory and important effect on financial success (β= 0.088, p=0.003). Outcomes depicted that dividend decision had a satisfactory and important consequence on financial success (β= 0.073, p=0.032). In addition, outcomes depicted that investment decision had a satisfactory and important consequence on financial success (β= 0.021, p=0.002). A strong dividend policy that may increase manufacturing companies' levels of return on assets and draw in investors should be in place for those listed on the Nairobi Securities Exchange.
Implications to Theory, Practice and Policy: The report suggested that in order to increase their income base, companies listed on the NSE that are in the manufacturing and related sectors should invest in product diversification strategies. Since the financial success of manufacturing enterprises is directly impacted by investment decisions. Subsidies for manufactured goods should be taken into account by the Kenyan government as a policy through the yearly budget proclamations. It is recommended that managers closely monitor the firm's liquidity, take on projects with positive net present values, and generate cash flow to support their investment and operational endeavors.
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