Abstract
This study sought to find the effect of selected firm specific factors on real estate firm financial performance. Financial performance was measured by return on assets (ROA) and return on equity (ROE). The objectives of the study were to; determine the effect of liquidity on financial performance; assess the effect of leverage on financial performance; and examine the effect of firm size on financial. The study was based on the Trade-off theory, Shiftable theory and Liquidity preference theory. The study used descriptive survey research design in an attempt to investigate the effect of selected firm specific factors on firm financial performance. The population of this study comprised the five (5) real estate firms listed under the investment subsector of the Nairobi Securities Exchange (NSE). The study used data covering a period of ten years from 2008 to 2017. The data was collected from published audited financial annual reports of the four (4) real estate firms listed in the Nairobi Securities Exchange. One was not studied due to unavailability of financial statements for the whole period of the study. The secondary data was collected using a data collection sheet. To describe profiles of the firms and research variables, means, standard deviations and coefficient of variation were used; and Pearson’s correlation was used to examine relationships. The diagnostic tests done were normality and autocorrelation tests. The researcher used SPSS software to assist in analyzing the data. The results revealed significant negative relationship between liquidity and financial performance. The results also showed insignificant positive relationship between leverage and financial performance. The results also showed insignificant positive relationship between firm size and financial performance. Further, the results evidenced that all the variables combined had a statistically significant effect on the financial performance. The study recommends further research on other firm specific factors not included in the study to determine whether they have a significant effect on financial performance of real estate in Kenya or not. Keywords: Firm Specific Factors, Financial Performance, Real Estate Firms, NSE DOI: 10.7176/RJFA/11-14-18 Publication date: July 31 st 2020
Highlights
Background of the StudyReal estate development has become a significant issue and an emerging question in the minds of Kenyans is how the housing situation will look like in the future
The target population for this study included firms listed in the Nairobi Securities Exchange (NSE) that deal with real estate investments
Descriptive Statistics Selected Firm Specific Factors The following selected firm specific factors were used in the study: Liquidity, leverage and firm size
Summary
Real estate development has become a significant issue and an emerging question in the minds of Kenyans is how the housing situation will look like in the future. Real estate is most likely to be an important engine of economic growth and will spur the interest of key investors. All over the world real estate prices have been escalating. This can be seen as in the case of the UK whose prices have been rising, but buying property remains 13 per cent more cost-effective than renting. UN-Habitat (2011) shows that the real estate development in Africa’s most emerging economies is placed between a rock and a hard place resulting from the lack of adequately finance urban shelter, not to mention huge demand for housing
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