Effect of Capital Allowance Incentives on the Financial Performance Of listed Consumer Goods Companies in Kenya

Abstract

The Consumer goods sector has been a major driver of industrial growth, leading to some international firm to enter the market thus increasing existing investment in recent years. However, their financial performance is lowlands

ubpar. The companies have experienced a decline on the contribution to the country’s GDP from 5.0% in

2017 to 4.1% in the manufacture of food, beverages and tobacco sector. Nevertheless, there is paucity of empirical and conceptual knowledge on the phenomenon influence of capital allowance incentive on the

financial performance. This study was anchored on the Agency cost theory. Descriptive cross-sectional design was used. The study used secondary data which was collected using a checklist and was extracted

from the Nairobi Security Exchange (NSE) reports between the year 2017-2021. The target population of the study comprised of the thirteen listed consumer goods companies in the Nairobi Securities Exchange as at 31st December 2021. The study used census technique. Data analysis was done with the aid of SPSS version

25.0. The study used correlation analysis and multiple regression to determine the relationship between capital allowance incentives and financial performance. To test the statistical significance, the t-statistic at 95%

The confidence level was used. Data was presented using tables and figures. Further, it was found that capital allowance had a positive regression coefficient of (0.739, p-value of 0.0463). The study will be useful to

listed consumer goods companies to institute more robust capital allowance incentives. The study will also contribute to the body of knowledge for both researchers and academicians.