INFLUENCE OF MACROECONOMIC FACTORS ON FIRM CAPITAL DECISIONS: THE CASE OF NONFINANCIAL FIRMS IN KENYA
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| 1. | Title | Title of document | INFLUENCE OF MACROECONOMIC FACTORS ON FIRM CAPITAL DECISIONS: THE CASE OF NONFINANCIAL FIRMS IN KENYA |
| 2. | Creator | Author's name, affiliation, country | Daniel Kon Ater; PhD Candidate, School of Business, University of Nairobi, Kenya |
| 2. | Creator | Author's name, affiliation, country | Cyrus Iraya; PhD, Professor, Department of Finance and Accounting, School of Business, University of Nairobi Kenya |
| 2. | Creator | Author's name, affiliation, country | Mirie Mwangi; PhD, Professor, Department of Finance and Accounting, School of Business, University of Nairobi Kenya |
| 2. | Creator | Author's name, affiliation, country | Kennedy Okiro; Lecturer, Department of Finance and Accounting, School of Business, University of Nairobi, Kenya |
| 3. | Subject | Discipline(s) | |
| 3. | Subject | Keyword(s) | macroeconomic variables, capital structure, generalised least squared |
| 4. | Description | Abstract | Purpose: The study investigates the relationship between macroeconomic variables and capital structure decisions of nonfinancial firms listed at the Nairobi Securities Exchange, in Kenya. Methodology: The study uses an unbalanced secondary panel data consisting of 36 nonfinancial firms listed at the Nairobi Securities Exchange (NSE) for the period 2015 to 2019 as at December 31st 2019. The sample selection was guided by data availability. The sectors excluded consisted of firms in banking, insurance, equity investment and real estate, including investment trusts. These exclusions were motivated by regulatory differences and for the ease of comparability of findings. Findings: The relationship between macroeconomic variables capital structure decision was found to be positive. This means that macroeconomic variables are determinant of capital structure decisions which supports the notion of trade-off theory and Pecking order theory as they advocate that firms should use debt to finance their operations. Implications: The results of this study have two major policy implications. First, nonfinancial firms in Kenya could significantly improve their performance if there is established utilisation of debt. Second, whilst policies aimed at popularising external finance to firms could have significant positive impacts on capital structure, the benefits of such policies would be much better realised if harmonised with efficient capital market for firms to raise debt capital with favourable interest. JEL: E02; E44; G10
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| 5. | Publisher | Organizing agency, location | Open Access Publishing Group |
| 6. | Contributor | Sponsor(s) | |
| 7. | Date | (YYYY-MM-DD) | 2020-11-07 |
| 8. | Type | Status & genre | Peer-reviewed Article |
| 8. | Type | Type | |
| 9. | Format | File format | |
| 10. | Identifier | Uniform Resource Identifier | https://oapub.org/soc/index.php/EJEFR/article/view/938 |
| 10. | Identifier | Digital Object Identifier (DOI) | http://dx.doi.org/10.46827/ejefr.v4i3.938 |
| 11. | Source | Title; vol., no. (year) | European Journal of Economic and Financial Research; Vol 4, No 3 (2020) |
| 12. | Language | English=en | en |
| 13. | Relation | Supp. Files | |
| 14. | Coverage | Geo-spatial location, chronological period, research sample (gender, age, etc.) | |
| 15. | Rights | Copyright and permissions |
Copyright (c) 2020 Daniel Kon Ater, Cyrus Iraya, Mirie Mwangi, Kennedy Okiro This work is licensed under a Creative Commons Attribution 4.0 International License. The research works published in this journal are free to be accessed. They can be shared (copied and redistributed in any medium or format) and\or adapted (remixed, transformed, and built upon the material for any purpose, commercially and\or not commercially) under the following terms: attribution (appropriate credit must be given indicating original authors, research work name and publication name mentioning if changes were made) and without adding additional restrictions (without restricting others from doing anything the actual license permits). Authors retain the full copyright of their published research works and cannot revoke these freedoms as long as the license terms are followed. |