EFFECT OF FIRM SIZE ON FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS LISTED IN NAIROBI STOCK EXCHANGE
Abstract
The purpose of study was to assess the effect of firm size on financial performance of manufacturing firms listed in Nairobi Securities Exchange. Manufacturing firms are expected to increase profits from its capital base, but there has been decreasing trend over the years. The decline in financial performance over the period under study was attributed to the weak capital structure characteristic of the manufacturing firms. Firms’ characteristic is all about its capital structure which is the life-blood and nerve centre of a business. This study was guided by the following specific objective; to establish the effect of the firm size on financial performance of manufacturing firms listed in NSE. The target population comprised of manufacturing sector. The secondary data was obtained from annual financial statements of all manufacturing firms prequalified in Kenya, and operated between the years 2012 to 2018. Data was analyzed by use of panel descriptive statistics. The study concluded that Firm size was characterized in Carbacid investments. Firm size as per each manufacturing firms which depicted that Carbacid investments had highest firm size. The firm’s size was characterized by financial position being highest mean. The firm’s size was not highly characterized by number of employees. This recommended most manufacturing firms to use number of employees to measure firm size. Thus, there is need to carry out the same study to other sectors especially long period than five years.
Key Words: Firm Size, Financial Performance
CITATION: Omenyo, D. M., & Muturi, W. (2019). Effect of firm size on financial performance of manufacturing firms listed in Nairobi Stock Exchange. The Strategic Journal of Business & Change Management, 6 (4), 1112 – 1119
Full Text:
PDFReferences
Abeywardhana S., (2017) Sectoral Diversification and the Banks' Return and Risk: Evidence from Chinese Listed Commercial banks”, Procedia computer science, Vol. 18, pp. 1737-1746.
Abor, J. (2015). The Effect of Capital Structure on Profitability: an empirical analysis of listed
Brealey F., (2012) The rising incidence of non-performing loans and the nexus of economic performance in Nigeria: An investigation. European Journal of Accounting Auditing and Finance Research, 2(5), 87–96.
Danso, F., (2014) “Do specialization benefits outweigh concentration risks in credit portfolios of German banks”, Discussion paper [10/2010] Dt. Bundesbank, Press and Public Relations Division.
Gathogo T, & Ragui, M. (2014) Determinants of firm size of default among farmers in Ghana, Journal of Development and Agricultural Economics,4(13): 339-345.
Jooma Y., & Gwatidzo, (2013) An empirical study of firm size efficiency of banking industry in Taiwan. Web Journal of Chinese Management Review, 15(1), 1-16.
Maja Pervan, Ivica Pervan and Marijana Ćurak (2017) The Influence of Age on Firm
Performance: Evidence from the Croatian Food Industry, university of Split, Faculty of Economics, Split, Croatia IBIMA Publishing Journal of Eastern Europe Research in Business and Economics, Vol. 2017 (2017), Article ID 618681, 9 pages
Makunyi (2011) “Identification of the Long-Run and the Short-Run Structure: An Application to the ISLM Model,” Journal of Econometrics 63: 7-36
Masira R., (2018) Assessing factors affecting the firm size of microfinance institutions: a case study of village credit institutions of Gianyar, Bali. GadjahMada International Journal of Business, 8(2), 247-273.
Mburu (2015) The Adjustment of Stock Prices to New Information‟, International Economic Review, 10 (1):1-21.
Minfang E., (2010) Demand for Collateral and Foreign Holdings of U.S. Assets. Journal of Monetary Economics, 48(2), 415-436.
Micheni (2011). The Monetary and Fiscal Linkage between Stock Returns and Inflation,” Journal of Finance, 38: 1-33.
Modigliani and Miller (1958), Modigliani Efficient capital market: A review of Theory and empirical work. The Journal of Finance, 25 (2). Papers and proceedings of the 28th Annual meeting of the American Finance Association, New York, N.Y. December, 28-30, 1969 :383-417
Njeri M., (2016). Assessing financial literacy in 12 countries an OECD Pilot Exercise, Paris: OECD Financial Affairs Division
Oner Hi, (2015) Determinants of financial growth by Ksh and Medium Enterprises among Commercial Banks in Kenya: Master’s Dissertation, University of Nairobi, Kenya, pp. 5-56.
Ozkan Haykir Mehmet Sinan (2015) firm size and firm performance of family owned companies Turkey, IBM, Vo. 3(4) 234-256
Owolabi, S. A. & Inyang, U. E. (2013) International pragmatic review and assessment of capital structure determinants, Kuwait Chapter of Arabian Journal of Business and Management Review, 2, (6): 82-96.
Pandey, I. M., (2011) “Capital Structure and the Company Characterstics: Evidence from an Emerging Market,” IIMA 10: 1-19.
Van Horn, Mike (2012). How To Grow Your Business without Driving Yourself Crazy. San Rafael: The Business Group.
DOI: http://dx.doi.org/10.61426/sjbcm.v6i4.1452
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.