Firm Characteristics and Financial Leverage of Companies Listed on the Nairobi Securities Exchange, Kenya
Abstract
The Study sought to find out the effect of firm characteristics on financial leverage of Firms listed in Nairobi Securities Exchange, Kenya. This study general objective was to find out, the effect of Firm Characteristics on financial leverage of firms listed in NSE, Kenya. The target Population was all the 65 firms listed in NSE, Kenya. This research was based on the underpinning theories such as trade off theory, pecking order theory as well as Agency theory. The study considered firms that have listed in NSE for the past fifteen years and utilised the secondary data obtained from firms financial statements. The period under consideration was 2003-2017. The sample size used was only 32 firms who are levered firms. The secondary data obtained from firms listed NSE financial statements was used to calculate the ratios which are relevant. Panel regression analysis, correlation analysis and the panel data obtained was analysed using descriptive statistics. The study found that firm size, profitability, tangibility, liquidity, growth had a negative and significant relationship on financial leverage. The study recommends that top management of listed firms should set up strategies of growth and expansion in sizes for example growth in market segments and shares. The study also recommended that firms listed in NSE should check their tangibility level.
Keywords: Firm size, growth, tangibility, liquidity, profitability, financial leverage, Nairobi Securities exchange
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