RELATIONSHIP BETWEEN CAPITAL RESTRUCTURING AND FINANCIAL PERFORMANCE OF LISTED FIRMS IN KENYA
Abstract
The study sought to determine the relationship between capital restructuring and financial performance of listed firms in Kenya. The study used a descriptive research design. Data was collected for a 10-year period between 2010 and 2019. The data was collected from financial statements of listed firms and annual reports from Nairobi Securities Exchange. The study was based on panel data based on forty-eight firms listed within the period. Descriptive and inferential statistics were used to analyze the data. Multiple regression and correlation analysis were used as inferential statistics. From the findings, debt to capitalization ratio showed a positive effect on ROA of listed firms between 2010 and 2019. The study found that firm size affected ROA of listed firms negatively. From the regression analysis, debt to capitalization ratio showed a significant effect on financial performance as measured by ROA. From the correlation analysis, debt to capitalization ratio showed a significant and positive relationship with ROA. The study concluded that capital restructuring has a positive relationship with financial performance of firms listed in Kenya. Firm size has a controlling negative relationship with financial performance of listed firms in Kenya. The study recommended that listed firms undertake continuous capital restructuring in order to enhance their financial performance. Similar studies in non-listed firms and with a different period was recommended for further research
Key words: Asset; Capital; Restructuring; Capitalization; Debt; Equity; Financial Performance; Firm Size
CITATION: Ithuku, E. M., & Mwangi, C. I. (2020). Relationship between capital restructuring and financial performance of listed firms in Kenya. The Strategic Journal of Business & Change Management, 8 (1), 105 – 114.
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DOI: http://dx.doi.org/10.61426/sjbcm.v8i1.1899
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