Business Administration

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Adoption of Near Field Communication in Universities in Kenya
(2015-09) Muthengi, Fredrick Mugambi; Njebiu, Victor Mwenda
In our day to day life, the adoption of new technology to new innovation in various sectors is rising. Campus life has shifted from students’ carrying laptops and a bag full of pass cards to carrying Ipads or smart phones. Barcode bars on pass and identification cards have been replaced by near field communication (NFC) instructions. NFC is a technology standard for very-short-range wireless connectivity that enables quick, secure two-way interactions among electronic devices. The level of global interaction and mode of communication is changing and the adoption of Near Flied Communication is on the rise, replacing bar code and QR code. The technology is at advanced stages ranging from file transfer; access controls to paying for goods and services on NFC enabled payment points/devices or cards. The introduction of Near Field Communication in the universities has enhanced the speed of processes as well as simplifying them. The pass cards/ids students carry along and time spent on queues waiting to be served is reduced. This paper explores the advantages of near field communication over magnetic bar codes and QR codes in an academic institution. Near field communication combines several instructions which are read via NFC enabled devices: smart phones or tags. Student card is customized with NFC tag: from library card, access control card to student identification card. NFC is at early stages of implementation in Kenya but has been successfully rolled out in transport industry as Bebapay. With the rise of mobile enabled near field communication devices, its adoption in Kenyan universities will be a success.
ANALYSIS OF THE VOLATILITY OF REAL EXCHANGE RATE AND EXPORTS IN KENYA USING THE GARCH MODEL: 2005-2012.
(Journal of Multidisciplinary Scientific Research, 2015-08-16) WASSEJA, MOHAMMED MUSTAPHA; MWENDA, SAMWEL N.; MUSUNDI, SAMMY W.; NJOROGE, ELIZABETH
The real exchange rate has proven to be an important factor in international trade because it is expected that exports respond to real exchange rate movements with respect to the characteristics of the importing and exporting countries. Exchange rate volatility increases uncertainty of profits on contracts denominated in foreign currency and subsequently dampens trade and economic growth. This study investigated how real exchange rate volatility affected exports of key Kenyan commodities to the European Union and United Kingdom, namely; tea, coffee and horticulture to the European Union. The presence of exchange rate volatility was determined using the GARCH model. A Bounds testing and Autoregressive Distributed Lag model was used to establish the presence of a long run relationship between exchange rate volatility and commodity exports. Findings revealed that exchange rate volatility affected tea exports to the UK and horticulture exports to the European Union. Foreign income played an important role in explaining tea and coffee exports to the UK and EU respectively.
Application of Central Composite Design Based Response Surface Methodology in Parameter Optimization of Watermelon Fruit Weight Using Organic Manure
(2017-03-18) Muriithi, Dennis K.1,; Arap Koske, J. K. 2,; Gathungu, Geofrey K. 3
Response Surface Methodology (RSM) is a critical technology in developing new processes, optimizing their performance and improving the design. In Kenya, watermelon cultivation is gradually gaining ground. It is a crop with huge economic importance to man as well as highly nutritious, sweet and thirst- quenching. In order to increase crop production, there is need to increase soil nutrient content with organic manure such as poultry, cow or other animal wastes. At present, there are no recommended standards with respect to rate of poultry manure, cow manure and goat manure for enhancement of yield of watermelon in Kenya. The main objective of the study was to develop an approach for better understanding of the relationship between variables and response for optimum operating settings for maximum yield of watermelon crop using Central Composite Design and Response Surface ethodology. Response Surface Model evolved for response shown the effect of each input parameter and its interaction with other parameters, depicting the trend of response. Verification of the Fitness of the model using ANOVA technique shows that the model can be used with confidence level of 0.95, for watermelon production. Further validation of the model done with the additional experimental data collected demonstrates that the model have high reliability for adoption within the chosen range of parameters. The optimal value for each factor was found as 17.13tons/Ha of poultry manure, 13.3tons/Ha of cow manure and 18.1tons/Ha of goat manure. At optimal conditions, the actual value of the fruit weight of watermelon was 93.148tons/Ha. This translates to 37.3tons per acre piece of land of watermelon fruit weight for a period of 75-85 days after sowing. In addition, a peasant farmer can generate about 745,184 Kenya shillings within a period of 75 day in one acre piece of land at a low price of Kshs 20 per kilogram of watermelon fruit. RSM has resulted in saving of considerable amount of time and money hence recommended in similar study.
Application of Simplex Lattice Design in Watermelon Production
(2019) Muriithi, Dennis K.
This paper discusses the use of Simplex Lattice Design approach to plan the experiment for yield of watermelon with an overall objective of optimizing the multiple responses of watermelon to organic manure. Multiple linear regression models have been adopted to express the output parameters (responses) that are decided by the input process parameters. Poultry manure, cow manure and goat manure were the independent variables to optimize the response values of interest that includes; watermelon fruit weight, number of fruits of watermelon per plant. Mixture experiments are appropriate to use when a researcher wishes to determine if synergism exists in mixing components which increases productivity. Three-component design presented in this study illustrated how to apply mixture designs in agricultural research. Mathematical Model evolved for response show the effect of each input parameter and its interaction with other parameters, depicting the trend of response. From, the equation of fruit weight and number of fruits, it can be concluded that goat manure has a more important role on watermelon production in the current study. Conclusively, the current study attained the optimal condition of 17.68 ton/Ha, 11.69 ton/Ha and 19.16 ton/Ha of poultry manure, cow manure and goat manure respectively, would guarantee the farmer a maximum yield of 22.13kg fruit weight of watermelon per plant and 7.74≈8 Fruit of watermelon per plant. The study exemplified that the development of statistical models for crop production can be useful for predicting and understanding the effects of experimental factors.
BCOM 251: HUMAN RESOURCE MANAGEMENT
(Chuka University, 2023-04-11) Chuka University
Communication Strategies Inherent in Business Discourse by Miraa Traders of Igembe and Somali Origin
(2014-10) Kobia, J. M.; Miriti, G.
The main purpose of this paper was to analyse the communication strategies employed by miraa traders from Igembe and Somali origin, in their business discourse. The researchers were given the impetus to undertake this study because of the uniqueness exhibited in miraa traders’ discourse. The study aimed at establishing communication strategies depicted in their discourse and was guided by the Politeness Theory as advanced by Brown and Levinson (1987) and Communication Accommodation Theory by Giles (1971) to form the basis of its theoretical framework. The study was carried out at Muringene Market and in Maua Town in Kenya. It employed the social networks approach to identify participants. The purposive sampling procedure was used. Data was collected by tape-recording negotiations as miraa traders went on with their business interactions and through non-participants observation. Data analysis was largely qualitative. The study found out that miraa traders make use of several communication strategies such as inclusion, exclusion, directness, high level of informality, and volubility and taciturnity that form the basis of this study
DENOTATIVE MEANINGS OF NAMES GIVEN TO BUSINESSES IN CHOGORIA TOWN: A PRAGMATIC ANALYSIS
(International Journal of Economics, Business and Management Research, 2019) Kinegeni, Mr. Loyford Kariuki; Atieno, Dr. Christine
Naming is an important aspect of our everyday life. Practically everything in the world has a name. This Article sought to provide a pragmatic analysis of names given to businesses in Chogoria town, Tharaka Nithi County in Kenya. The objectives of the study was to establish the denotative meanings of business names in Chogoria town. The study adopted a descriptive research design and used the Frame Semantic Theory to explain how encyclopedic knowledge can be used to arrive at the meanings of these business names. Literature was reviewed on meaning, naming, other studies on the same and how context determines meaning. Stratified sampling and purposive sampling were used to sample thirty business names from the various business types in the area of study to determine those names that would help achieve the objective. Interview schedule was used as the data collection instrument. The data was analyzed using the thematic analysis.
Determination of Infant and Child Mortality in Kenya Using Cox-Proportional Hazard Model
(Science Publishing Group, 2015-09-10) Muriithi, Daniel Mwangi 1; Muriithi, Dennis K. 2
Abstract One of the Millennium Development Goals is the reduction of infant and child mortality by two-thirds by year 2015. To achieve this goal, efforts need be concentrated at identifying cost-ffective strategies as many international agencies have advocated for more resources to be directed to health sector. One way of doing this is to identify the important factors that affect infant and child mortality. This study is necessary because, Infant and child mortality is one of the most important sensitive indicators of the social economic and health status of a community. This is because more than any other age group of a population, infants and children survival depends on the socioeconomic condition of their environment. This study addresses factors affecting infant and child mortality in Kenya. The main objective of the paper is to determine the effect of socioeconomic and demographic variables on infant and child mortality. Childhood mortality from the, KDHS 2008-09 data, was analyzed in two age periods: mortality from birth to the age of 12 months, referred to as “infant mortality” and mortality from the age of 12 months to the age of 60 months, referred to as “child mortality”. Data from Kenya Demographic and Health Survey (KDHS 2008-09) was collected by use of questionnaires, after carrying out a two-stage cluster sampling design. The Cox regression survival analysis was used to compute relative risk of the socioeconomic and demographic variables, on infant and child mortality. The study revealed that the socioeconomic and demographic factors affect both infant and child mortality. The relative risks were higher for infant’s mortality as compared to child’s mortality. The place of birth has the greatest impact on infant mortality. The study recommends policy makers and programme managers in the child health sector to formulate appropriate strategies to improve the situation, of children less than five years in Kenya, by creating awareness on these factors and improving on them.
Effect of Corporate Environmental Disclosure on Financial Performance of Firms Listed at Nairobi Securities Exchange, Kenya
(2016-08-01) Karambu, Kiende Gatimbu; Wabwire, Joseph Masinde
Corporate environmental disclosure entails reporting on the impact of company activities on the natural environment such as waste management, recycling, carbon management, emission, pollution, wetland and wildlife conservation. Conventional accounting systems are limiting since they fail to directly address sustainability concerns. They have failed to address economic growth against social and environmental needs in order to balance the different needs of various stakeholders. Sustainability has become a major pillar of today’s business activities. This study consequently aimed at assessing the effect of corporate environmental disclosure on financial performance of listed firms at the Nairobi Securities Exchange, Kenya. This study made use of longitudinal secondary data from the annual reports and financial statements of listed companies at the Nairobi Securities Exchange. Content analysis of sampled listed companies’ annual reports was undertaken to examine environmental disclosure practices. A checklist of environmental disclosure items and categories was developed and environmental disclosure indices computed. Casual research design was employed to determine the cause-effect relationship between corporate environmental Disclosure and financial performance. Target population of the study was 61 listed companies. Purposive sampling was employed in selecting firms that have been listed for entire period of study and whose annual reports are available at the Nairobi Securities Exchange. This resulted into a sample size of 32 listed companies. Coefficient of Skewness was used to test the normality of data. Homoscedasticity and auto-correlation assumptions of the regression model were tested using scatter plots and Durbin Watson test. Linear regression model was used to determine the casual relationship between environmental disclosure and financial performance. The overall model was found to be significant with F=8.514, P-value <0.05. The predictor variable explained 47.7% of changes in financial performance. Firm size and leverage have no effect on environmental disclosure. Findings reveal that environmental disclosure with P-value <0.05 has a positive significant effect in the mean financial performance. The study recommends that firms should engage in environmental disclosure because it leads to increased financial performance. The study would be useful to the government and also managers to ensure policies are put in place to ensure present generations meet their needs without compromising the ability of future generations to meet theirs. The study also forms basis for further research and adds knowledge to existing body.
Effect of Corporate Environmental Disclosure on Financial Performance of Firms Listed at Nairobi Securities Exchange, Kenya
(International Journal of Sustainability Management and Information Technologies, 2016-08-01) Gatimbu, Karambu Kiende; Wabwire, Joseph Masinde
Corporate environmental disclosure entails reporting on the impact of company activities on the natural environment such as waste management, recycling, carbon management, emission, pollution, wetland and wildlife conservation. Conventional accounting systems are limiting since they fail to directly address sustainability concerns. They have failed to address economic growth against social and environmental needs in order to balance the different needs of various stakeholders. Sustainability has become a major pillar of today’s business activities. This study consequently aimed at assessing the effect of corporate environmental disclosure on financial performance of listed firms at the Nairobi Securities Exchange, Kenya. This study made use of longitudinal secondary data from the annual reports and financial statements of listed companies at the Nairobi Securities Exchange. Content analysis of sampled listed companies’ annual reports was undertaken to examine environmental disclosure practices. A checklist of environmental disclosure items and categories was developed and environmental disclosure indices computed. Casual research design was employed to determine the cause-effect relationship between corporate environmental Disclosure and financial performance. Target population of the study was 61 listed companies. Purposive sampling was employed in selecting firms that have been listed for entire period of study and whose annual reports are available at the Nairobi Securities Exchange. This resulted into a sample size of 32 listed companies. Coefficient of Skewness was used to test the normality of data. Homoscedasticity and auto-correlation assumptions of the regression model were tested using scatter plots and Durbin Watson test. Linear regression model was used to determine the casual relationship between environmental disclosure and financial performance. The overall model was found to be significant with F=8.514, P- value 0.05. The predictor variable explained 47.7% of changes in financial performance. Firm size and leverage have no effect ˂ on environmental disclosure. Findings reveal that environmental disclosure with P-value 0.05 has a positive significant effect ˂ in the mean financial performance. The study recommends that firms should engage in environmental disclosure because it leads to increased financial performance. The study would be useful to the government and also managers to ensure policies are put in place to ensure present generations meet their needs without compromising the ability of future generations to meet theirs. The study also forms basis for further research and adds knowledge to existing body.
Effect of corporate risk management disclosure on financial performance of non-financial service firms listed at Nairobi Securities Exchange, Kenya
(Int. J. Business Continuity and Risk Management, 2017) Gatimbu, Karambu Kiende; Kimathi,Henry; Wabwire, Joseph Masinde
The Kenyan investment community and other stakeholders lag behind America, Europe and Australia in terms of their willingness and ability to cross-examine sustainability reports for risk and financial modelling. This study consequently aimed at assessing the effect of corporate risk management disclosure on financial performance of listed firms in Kenya. Content analysis of sampled listed companies’ annual reports was undertaken to examine risk management disclosure practices. Casual research design was employed to determine the cause-effect relationship between risk management disclosure and financial performance. Target population of the study was 61 listed companies. The sample size was 32 listed companies. Coefficient of skewness was used to test the normality of data. Homoscedasticity and auto-correlation assumptions of the regression model were tested. Risk disclosure was found to have a positive but with no significant difference on mean financial performance. However, there is a strong significant relationship between risk disclosure and financial performance.
Effect of Debt Finance on Financial Performance of Savings and Credit Cooperative Societies in Maara Sub-county, Tharaka Nithi County, Kenya
(Science Publishing Group, 2017) Kirimi, Peter Njagi; Simiyu, Justo; Murithi, Dennis
Debt financing is the acquisition of funds through borrowing. Most Sacco's results into borrowing to finance their increased customer's demands thus increasing the leverage if not controlled. This study determined the effects of debt finance on financial performance measured ROE. The study investigated the effect of interest rate, loan tenure, debt/equity ratio, and interest coverage ratio on financial performance of savings and credit cooperative societies in Maara Sub-County, Tharaka Nithi County, Kenya. Causal research design and a target population of 10 Sacco's and census survey were used. Secondary data from the Saccos financial statements for the last eight years used. Descriptive and inferential statistics were used with help of Statistical Package for Social Sciences (SPSS) and results presented in tables. A strong positive relationship of 0.984 between debt and ROE was revealed. A negative relationship existed between interest rate, loan tenure and ROE while a positive relationship was revealed between debt equity ratio and interest coverage ratio on ROE respectively. Interest rate, loan tenure and debt equity ratio had significant effect on ROE at t-statistics of 3.474,-2.938, 9.217 and 8.728 respectively with their P-values 0.018, 0.032, 0.000 and 0.000 less than 0.05 respectively.
Effect of Debt Finance on Financial Performance of Savings and Credit Cooperative Societies in Maara Sub-county, Tharaka Nithi County, Kenya
(Science Publishing Group, 2017-08-03) Kirimi, Peter Njagi; Simiyu, Justo; Murithi, Dennis
Debt financing is the acquisition of funds through borrowing. Most Sacco’s results into borrowing to finance their increased customer’s demands thus increasing the leverage if not controlled. This study determined the effects of debt finance on financial performance measured ROE. The study investigated the effect of interest rate, loan tenure, debt/equity ratio, and interest coverage ratio on financial performance of savings and credit cooperative societies in Maara Sub-County, Tharaka Nithi County, Kenya. Causal research design and a target opulation of 10 Sacco’s and census survey were used. Secondary data from the Saccos financial statements for the last eight years used. Descriptive and inferential statistics were used with help of Statistical Package for Social Sciences (SPSS) and results presented in tables. A strong positive relationship of 0.984 between debt and ROE was revealed. A negative relationship existed between interest rate, loan tenure and ROE while a positive relationship was revealed between debt equity ratio and interest coverage ratio on ROE respectively. Interest rate, loan tenure and debt equity ratio had significant effect on ROE at t-statistics of 3.474, -2.938, 9.217 and 8.728 respectively with their P-values 0.018, 0.032, 0.000 and 0.000 less than 0.05 respectively.
Effect of Debt Finance on Financial Performance of Savings and Credit Cooperative Societies in Maara Sub-county, Tharaka Nithi County, Kenya
(International Journal of Accounting, Finance and Risk Management, 2017) Kirimi,Peter Njagi; Simiyu,Justo; Murithi Dennis
Debt financing is the acquisition of funds through borrowing. Most Sacco’s results into borrowing to finance their increased customer’s demands thus increasing the leverage if not controlled. This study determined the effects of debt finance on financial performance measured ROE. The study investigated the effect of interest rate, loan tenure, debt/equity ratio, and interest coverage ratio on financial performance of savings and credit cooperative societies in Maara Sub-County, Tharaka Nithi County, Kenya. Causal research design and a target population of 10 Sacco’s and census survey were used. Secondary data from the Saccos financial statements for the last eight years used. Descriptive and inferential statistics were used with help of Statistical Package for Social Sciences (SPSS) and results presented in tables. A strong positive relationship of 0.984 between debt and ROE was revealed. A negative relationship existed between interest rate, loan tenure and ROE while a positive relationship was revealed between debt equity ratio and interest coverage ratio on ROE respectively. Interest rate, loan tenure and debt equity ratio had significant effect on ROE at t-statistics of 3.474, -2.938, 9.217 and 8.728 respectively with their P-values 0.018, 0.032, 0.000 and 0.000 less than 0.05 respectively.
Effect of Financial Leverage on Profitability of Firms Listed in the Nairobi Securities Exchange
(International Journal of Science and Research (IJSR), 2017-07-07) Olang’, Margret
Financial leverage is the use of fixed charge sources of funds to finance the firms’ investment projects. A levered firm is a firm that employs debt in its capital structure. Excessive use of debt is likely to expose the firm to financial risk hence insolvency. Therefore, a firm should maintain an optimal capital structure that will minimise the overall cost of capital. This study sought to establish the effect of financial leverage on the profitability of firms listed in the NSE. Causal research design was employed on the target population of 66 listed firms. Purposive sampling technique was used to select a sample size of 30 listed firms. Data was analysed using descriptive and inferential statistics. Descriptive statistics was used to test for normality of data. Inferential statistics on the data were done using regression model. The study established that, firm size has a statistically significant effect on the profitability of listed firms with p value of 0.002. Liquidity and growth opportunity on the other hand were not statistically significant indicating p values of 0.062 and 0.914 respectively. This means they have no significant effect on the profitability of firms listed in the NSE.
Effect of Leverage on Performance of Non-financial Firms Listed at the Nairobi Securities Exchange
(Science Publishing Group, 2015-08-13) Mukaria, Henry Kimathi; Mugenda, Nebat Galo; Akenga, Grace Melissa
Managers strive to maximise shareholder wealth by making rational financing decisions regarding optimal capital structure which would minimise its cost of capital. In attempt to magnify the return to shareholders, managers employ the use of debt. When excessive debt financing is employed by a firm, it increases the cost of financing and the financial risk of the firm leading to decreasing the return on equity as a result of financial distress. Do the various debt equity ratio levels lead to different financial performance when compared for high levered and low levered firm, high growth and low growth firm or large and small firms? A causal research design was used to establish the cause and effect relationship between financial leverage and the financial performance of the firms. The target population was 61listed firms on the Nairobi securities exchange by December 2013.Purposive sampling was used to select 38 non-financial companies. Financial companies were eliminated because the company’s capital structures have specific characteristics affected by industry regulatory requirements. Secondary data was obtained from published financial statements of the sampled companies for the six year period from 2008 to 2013.Ordinary Least Square method was used to establish the cause effect relationship among variables; Hypotheses were tested at 5% significance level using t-statistic. The study found that there was no significant difference in financial performance between highly levered and lowly levered firms and that there existed a negative relationship between Leverage and firm’s performance. There were also no significant differences in financial performance between high growth levered firms and low growth levered firms and that there existed a negative relationship between a firm’s growth opportunity and financial leverage ratio. There was no significant difference in financial performance between large levered firms and small levered firms. The findings of this study may act as a policy guideline to finance managers involved in managing firms on the contribution of financial leverage and its association with return on equity to maximise shareholder wealth.
Effect of Leverage on Performance of Non-financial Firms Listed at the Nairobi Securities Exchange.
(2015-09) Mukaria, Henry Kimathi*; Mugenda, Nebat Galo,; Akenga Gr, Grace Melissa
Abstract: Managers strive to maximise shareholder wealth by making rational financing decisions regarding optimal capital structure which would minimise its cost of capital. In attempt to magnify the return to shareholders, managers employ the use of debt. When excessive debt financing is employed by a firm, it increases the cost of financing and the financial risk of the firm leading to decreasing the return on equity as a result of financial distress. Do the various debt equity ratio levels lead to different financial performance when compared for high levered and low levered firm, high growth and low growth firm or large and small firms? A causal research design was used to establish the cause and effect relationship between financial leverage and the financial performance of the firms. The target population was 61listed firms on the Nairobi securities exchange by December 2013.Purposive sampling was used to select 38 non-financial companies. Financial companies were eliminated because the company’s capital structures have specific characteristics affected by industry regulatory requirements. Secondary data was obtained from published financial statements of the sampled companies for the six year period from 2008 to 2013.Ordinary Least Square method was used to establish the cause effect relationship among variables; Hypotheses were tested at 5% significance level using t-statistic. The study found that there was no significant difference in financial performance between highly levered and lowly levered firms and that there existed a negative relationship between Leverage and firm’s performance. There were also no significant differences in financial performance between high growth levered firms and low growth levered firms and that there existed a negative relationship between a firm’s growth opportunity and financial leverage ratio. There was no significant difference in financial performance between large levered firms and small levered firms. The findings of this study may act as a policy guideline to finance managers involved in managing firms on the contribution of financial leverage and its association with return on equity to maximise shareholder wealth.
Effect of Liquidity on Financial Performance of Firms Listed at the Nairobi Securities Exchange,
(International Journal of Science and Research (IJSR), 2015) Akenga, Grace
Liquidity refers to the ability of a firm to meet its obligations as and when they fall due. In order to meet their obligations, firms are expected to hold a certain percentage of their total finance in cash. However, majority of the institutions especially financialinstitutions tend to focus only on profit maximization at the expense of liquidity management. It is therefore the role of financial managers to establish effective mechanisms of meeting a firm’s obligations and profit maximization. The objective of the study was to establish the effect of current ratio, cash reserves and debt ratio on financial performance of firms listed at the Nairobi Securities Exchange (NSE). Causal research design was adopted. Purposive sampling technique was used to select 30 firms. The data was analyzed using descriptive and inferential statistics It was found that current ratio and cash reserves have a significant effect on ROA with a p value of less than 0.05.The debt ratio was found to have no significant effect on ROA as it had a significance level of 0.571.
Effect of Liquidity on the Dividend Payout by Firms Listed at the Nairobi Securities Exchange, Kenya.
(2015-10) Olang’, M. A.,; Akenga, G. M.,; Kamau, J. M.; Olang, Margaret Akinyi
Dividend decision is a critical finance function since it involves determining the amount distributed to shareholders as earnings or the amount to reinvest internally. The determination of dividend pay-out is influenced by the liquidity position of the firm but the extent to which liquidity affects the dividend pay-out still remains a puzzle since most empirical studies conducted have reported inconsistent results and no universally accepted explanation for companies with adequate liquidity have observed uniform dividend payment behaviour. It is in this context that the study was set out to determine the effect of liquidity on dividend pay-out of a firm. The objectives of the study were; to determine the effect of profitability, cash flows and working capital on the firms’ dividend pay-out decisions. The study employed causal comparative research design on a target population of 61 firms listed at the NSE. Purposive sampling was used to select 30 firms which consistently paid dividends from the year 2008 to 2012. Data analysis was done using descriptive and inferential statistics. The study revealed that profitability plays a major role in dividend pay-out because of the higher coefficient as compared to cash flows and working capital and consequently the companies which posted higher profits translated this to higher dividends paid out to investors. The study recommends that firms should ensure that profits are stable, cash flows freely flow into the firm and working capital is efficiently managed so as to increase the firms’ dividend pay-out. The results would provide information to managers to determine an optimal dividend pay-out that would maximise the company’s stock price and thus lead to maximisation of shareholders wealth. The study also forms a basis for further research and adds knowledge to the existing body.
Effect of liquidity risk on shareholders’ wealth in commercial banks listed at the Nairobi securities exchange
(Journal of Environmental Sustainability Advancement Research, 2022) Mogusu, M. W.; Nkari, I. M.; Wabwire, J. M.
Shareholders’ wealth is among key decisions in a firm because it has a bearing on overall investor perception and firm value. There has been concern about declining value of shareholders’ wealth among commercial banks listed at the Nairobi Security Exchange (NSE). Previous studies have linked financial risk to shareholders’ wealth. Researchers however fail to agree on the magnitude and direction of the effect. It is not established how liquidity risk would affect shareholders’ wealth of commercial banks listed at the NSE. The objective of this study was to establish the effect of Liquidity risk on Shareholders’ wealth of Commercial Banks listed at the NSE. Descriptive research design was adopted. The target population was eleven commercial banks that had been constantly listed at the NSE from 2013-2019. A census was conducted to collect data from the eleven banks due to the smallness of the population. Data was collected using a checklist. Data was obtained from published financial statements and the Banking survey publications for seven years from 2013 to 2019. Data was analyzed using simple and multiple regression analysis with the help of SPSS version 25.0. Hypothesis was tested using t-statistic at 5% significance level. The study found that liquidity risk had a negative effect on shareholders’ wealth (regression coefficient -0.556, p-value of 0.023). Firms that have high liquidity have more cash flow and are able to take investment opportunities and hence increase shareholders’ value. Commercial banks should come up with ways of minimizing this risk.

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