Nairobi Securities Exchange Research Articles

The Mediating Effect of Employee Outcomes on the Relationship between Green Human Resource Management Practices and Firm Performance

Purpose: The purpose of the study was to determine the mediating effect of employee outcomes on the relationship between green human resource management (HRM) practices and the performance of firms listed on the Nairobi Securities Exchange (NSE). The study was anchored on the Guest model of HRM. It was guided by the positivist research philosophy and used a cross-sectional research design.A pilot was done in 12 firms not listed on the NSE. Reliability was ascertained through Cronbach’s coefficient and validity through expert judgement. Methodology: Primary data was collected using a structured questionnaire in a census of all the 62 NSE-listed firms. SPSS software was used to conduct descriptive and inferential statistics including Pearson correlation and simple regression analysis. The presentation of the results was in tables. Findings: The findings revealed an indirect link between green HRM practices and firm performance through employee outcomes. This implies the presence of a mediating effect (total effect minus the direct effect ()) of 0.284. Meaning that employee outcomes partially mediated the relationship between green HRM practices and firm performance. Therefore, the null hypothesis that employee outcomes have no statistically significant mediating effect on the relationship between green HRM practices and firm performance, was rejected. Unique contribution to theory, practice and policy: The study concluded that green employee outcomes (competency, commitment, and empowerment) were present in the listed firms and led to enhanced firm performance. The study validates the Guest model of HRM illustrating that the model is applicable in the study of firm performance. The study recommends that firms should introduce green HRM practices to realise employee outcomes that engrave an eco-culture among employees linked to sustainable performance. Further areas of research are; a study exploring the mediating role of other employment outcomes on the relationship between green HRM practices and firm performance. The study contributes to green HRM research theory and practice and offers a platform for further research by HR students, scholars, and researchers. Finally, the findings would guide Human Resource Managers as they institute green HRM practices in their organisations.

Cost of Capital and Investment Decision of Non-Financial Firms Listed at Nairobi Securities Exchange, Kenya

The main purpose of the study was to assess the influence of cost of capital on investment decision of non-financial firms listed at the Nairobi Securities Exchange, Kenya. The study employed the theory of Modern Portfolio and The trade-off theory. The study employed descriptive research design. The study was carried out at firms listed at the NSE, Kenya with a population of 46 non-financial firms listed at the Nairobi Securities Exchange (NSE) as at December 2019. A census of 46 non-financial firms was considered. Secondary data was collected from annual reports of the non-financial companies listed at NSE and the NSE handbooks. Expert opinion was used to ensure data validity and reliability. The data was analyzed descriptively by means and the standard deviation, while multiple regression analysis was used to establish the influence between the variables. Regression results showed that cost of equity has a positive effect on financial performance as measured by Return on Assets (β = 0.2737, p = 0.0000); cost of preference shares affects investment decision negatively and significantly (β = -0.2430, p = 0.0015), and that the effect of cost of debt on investment decision is significantly positive (β = 0.2934, p = 0.0000). Given from the findings of the study that less than 34% of variations can be attributed to the cost of capital on investment decisions for the listed non-financial firms, this study has proved that effective working capital management practices will play a crucial role in improving the overall profit margins for the listed non-financial firms at NSE. In conclusion, cost of debt is a significant positive contributor to the investment decision of the non-financial listed firms at the NSE. The debts are essential when the firm is lacking finance in running its daily expenditure smoothly. The NSE and other regulating authorities such as the Capital Markets Authority (CMA) should therefore ensure that policies are put in place to help the firms manage their cost of capital efficiently. These policies must be in line with the Sustainable Development Goals (SDGs). These policies may include availing access to credit facilities and promoting trading in shares of the listed firms and these policies should be integrated with SDGs, which recognizes that action in one area will affect outcomes in others, and that development must balance social, economic and environmental sustainability.

Effect of Firms’ Soundness on Shareholders’ Earnings of Listed Firms at the Nairobi Securities Exchange, Kenya

The global changes in the business environment and the increased demand for improved shareholder’s earnings have prompted big firms to re-examine their soundness. During the 2008 global economic crisis, many big institutions experienced challenges like liquidity challenges, poor leverage, and drop in share prices and decline in assets which led to the decline in the earnings of shareholders. current study was therefore necessary to analyse the effect of firm’s soundness on shareholders earnings of listed firms at the Nairobi Securities Exchange. The specific objectives of the study were: To evaluate the effect of liquidity on the shareholders earnings of firms listed at Nairobi securities exchange, Kenya, to establish the effect of firm size on shareholders earnings of firms listed at Nairobi securities exchange, Kenya, to examine the effect of leverage on shareholders earnings of firms listed at Nairobi securities exchange, Kenya and to analyse the effect of firm’s age on shareholders earnings of firms listed at the Nairobi securities exchange, Kenya. This study is expected to assist businesses in comprehending the soundness that must be emphasized in order to avoid financial losses. As a result, it assist in informing the policies of listed companies in terms of liquidity, leverage, and assets, which is a measure of the firm's size. Firms should be able to develop a policy that improves shareholder earnings based on soundness. Finally, it is expected that shareholders and other potential investors will benefit from a clear understanding of the factors that influence earnings per share within the company. The Modigliani and Miller theory, as well as the Agency theory, were used to guide the research. A descriptive research design was used in this study. The study's target population was all listed companies on the Nairobi Securities Exchange over the period 2015 to 2021. The 64 companies were analyzed using the census study. Data had been collected using a secondary data collection sheet. The study employed secondary data obtained from the published financial statements of the respective firms, from the Nairobi Securities Exchange and the Capital Markets Data. A panel regression model was employed in the analysis of data with the aid of the stata version 14. The study found out that Liquidity had a positive significant effect on the shareholders earnings In addition, firms’ size had a significant and positive effect on the shareholders ‘earnings. Moreover, Leverage had a non significant positive effect on the shareholders earnings .The firms’ age on the other hand has a positive and significant effect on the shareholders earnings.
 The study recommends the following based on the findings. First the listed firms should enhance its liquidity by investing more on liquid assets. This should entail more investments in treasury bills, treasury bonds and other liquid stocks. They should also diversify their investments by investing in money markets. Additionally it should enhance its liquidity by controlling its overheads through getting rid of unnecessary expenses. Secondly, the listed firms needs to expand its asset base. As seen from the findings, firms size had a significant effect on the shareholder’s earnings meaning that the higher the size in terms of total assets, the higher the shareholders earnings. Firms should therefore expand its assets base by developing new products for the customers, increasing its customer base while expanding to new markets. Thirdly, the findings also indicate that firm’s age has a significant effect on the shareholder’s earnings. To sustain its performance and shareholder’s earnings, firms that have been in operation for many years compared to the rest should harness on the experience and economies of scale to ensure that they are able to sustain their performance. This should entail a thorough trend analysis of its performance over the years and designing better strategies based on the past challenges and its internal strengths.

Effect of Liquidity Shock on Financial Performance of Listed Commercial Banks in Nairobi Securities Exchange, Kenya

A strong banking system is essential to the stability and expansion of the economy. However, all banks face significant risks in the unpredictably volatile environment of today, encompassing credit risk, interest rate risk, operational risk, liquidity Shock, market risk, and foreign exchange risk. Liquidity Shock is one of many risks that commercial banks that are listed in the Nairobi Securities Exchange (NSE) are subjected to. This risk can have a significant effect on the financial performance of these banks. As such, the purpose of the study was to analyze the effect of liquidity Shock on financial performance of commercial banks listed in Nairobi Securities Exchange. An independent variable, liquidity shock contribute to this risk. This study concentrated on commercial banks which are listed in the Nairobi Securities Exchange market (NSE, 2022); and utilized data from 2013-2022. The study was anchored on liquidity shock theory, A quantitative research design was used for the study. The study adopted a Census, which included all the 11 commercial banks listed in the NSE for the period 2013 to 2022 due to availability of data. Secondary data was collected from the reported financial statements of respective commercial banks for the period 2013 to 2022. Obtaining published financial statements from each of the listed commercial banks on the NSE over a ten-year period – yearly is part of the data collection process. In order to analyze the relationship between liquidity Shock and financial performance of commercial banks with NSE listings, the data was subjected to panel regression analysis. To statistically describe the data, measures of central tendency, dispersion, and position was used. To determine whether the data adhered to the conventional least square assumptions, diagnostic tests were utilized. 

Impact of Asset Quality Compliance on Financial Performance of Nairobi Securities Exchange Listed Commercial Banks

Asset quality compliance is relatively important; however, the banking sector has undergone major financial shocks due to compliance signals. With losses experienced among commercial banks, for instance, return on assets (ROA) dropped consistently from 29% to 24% in 2019 to 21% in 2020, hence the wrong signals. The decline in the number of assets and low deposits further magnified the challenge; this led to the closure of a number of banks, such as Chase Bank and Charterhouse Bank. Furthermore, a national bank was acquired by Kenya Commercial Bank due to inefficient assets. The purpose of the study was to establish the influence of asset quality compliance requirements on the financial performance of commercial banks listed on the Nairobi Securities Exchange and hence determine the null hypothesis that asset quality compliance requirements have no significant effect on the financial performance of commercial banks listed on the Nairobi Securities Exchange. A mixed research design was applied to a population of 12 commercial banks listed at Nairobi Securities Exchange Kenya. This is comprised of causal research designs and longitudinal designs. The study employed a mixed research design and collected secondary data for a period of 5 years. The study found that asset quality requirements had a significance level of P<0.05, thus P = 0.0268, implying significance. The study concluded that assets have a significant impact on banks financial performance. The study recommends that commercial bank stakeholders should invest in assets since they lead to financial performance. The study may benefit a number of people, including bank management, the government, and future scholars.

Sustainability reporting and financial performance of listed financial firms in Kenya

Financial sector stability is vital for the realization of economic development. Failure to incorporate environmental, social and governance (ESG) elements into corporate strategies can lead to corporate failure. Through the adoption of a descriptive research design, this study aims to determine the relationship between sustainability reporting and the financial performance of financial companies listed on the Nairobi Securities Exchange (NSE) in Kenya. Through the census method, the study population of twenty-three listed financial firms was obtained, and secondary data for the period from 2015 to 2021 was extracted through content analysis. Data on predictor variables were obtained through a document check index utilizing a non-refined exploratory factor analysis, while data on the response variable were obtained directly from annual reports. The data were analyzed through descriptive and inferential statistics. Modelling was further adopted through feasible generalized least squares (FGLS) to counter the problem of first order serial correlation. The findings indicate a positive and significant relationship between ESG reporting and the financial performance of listed financial firms in Kenya. The results imply that firms should embrace sustainability since ESG drives corporate strategies and will help firms to improve their performance, which will bring improved resilience. Focus on the triple bottom line enables value maximization for the three Ps – profit, people, and planet – thus facilitating sustainable development. The harmonization of reporting guidelines which is process-driven rather than content-driven will minimize greenwashing by firms. Lastly, industry players should ensure the availability and quality of ESG data.

Working Capital Management Practices on Profitability of Manufacturing Firms Listed in Nairobi Securities Exchange, Kenya

The major purpose for which any company is formed is to generate profits for the shareholders. Profits are meant to keep growing and not static if the business is to be sustainable. Profits refer to the gains used for the benefit of the business stakeholders and is generally calculated after a specified period of time, for example within a financial year. The profitability of a business can be described as the ratio that provides more information about the profit number benchmarked against a given point of reference like the investments or equity of a firm. Through the profitability, the company is able to determine its combined success in the market that is crucial to its growth and survival more so to manufacturing firms. Profitability ratios are also used in examining the financial health of a company. The profits of the 9 manufacturing firms listed in the Nairobi Securities exchange has been dwindling for the period under study triggering the researcher to want to know whether declining profits was in any way related to the working capital management practices. The general objective of the study was to investigate working capital management practices on profitability of manufacturing firms listed in Nairobi Securities Exchange. The specific objectives of the study were; to analyze the effect of cash holding management practices on profitability of manufacturing firms listed in NSE, to determine the influence of inventory management practices on profitability of manufacturing firms listed in NSE, to assess the effect of current liabilities management practices on profitability of manufacturing firms listed in NSE and to analyze the influence of debtors’ management practices on profitability of manufacturing firms listed. The research relied heavily on the cash conversion cycle theory, the profit innovation theory, and the credit theory. The research strategy used in this study was explanatory. Nine manufacturing companies trading on the Nairobi Stock Exchange were the focus of the research. Due to the small sample size, the research relied on census data. Secondary data was gathered from the publicly available financial statements of the targeted organizations for the time period. The data was analyzed using the 23rd edition of the Social Science Statistical Package (SPSS).It was decided to do a panel data analysis. Secondary data in the form of panel data was used for the study, which spanned the years 2014 to 2022. The way in which cash is handled by management has a major impact on the bottom line. The financial success of companies trading on the NSE's manufacturing index is also significantly impacted by how well they manage their inventories. A company's financial success is significantly impacted by how well it handles its current obligations and by how well it handles its debtors. According to the study's findings, NSE-listed manufacturing businesses' financial performance may be described by differences in cash holding management methods, inventory management practices, Current liabilities management strategies, and debtors' management practices alone. Based on the findings, it was suggested that NSE-listed manufacturing firms improve their financial performance by implementing better cash holding management practices, inventory management practices, Current liabilities management practices, and debtors' management practices.

Debt Financing and Operational Efficiency of Companies listed at Nairobi Stock Exchange, Kenya

Background: As companies evolve, they confront a myriad of challenges, opportunities, and risks, demanding a laser focus on financial strategies. Within this landscape, the intertwined concepts of debt financing and operational efficiency emerge as critical determinants of a firm's performance and longevity. Debt financing sources presents an intricate landscape in which companies make their financial decisions. However, the existing literature often treats debt financing as a homogenous entity, lacking the granularity required to discern how the specific composition of debt, including the reliance on trade credit versus traditional short-term and long-term bank borrowings, might influence operational efficiency. Thus, this study aimed at identifying the effect of debt financing composition on operational efficiency of companies listed in NSE. Methods: The research focused on examining the link between debt financing structures and operational efficiency in 50 firms listed on the Nairobi Securities Exchange (NSE). The study collected panel data ranging between 2015 and 2022. A positivist research philosophy was employed, utilizing quantitative analysis techniques, specifically descriptive statistical analysis and random effects regression model. Findings: The regression results of the random effects model reveal the relationship between debt financing constructs and operational efficiency. The overall R-squared value for the model is 0.176, suggesting that around 17.6% of the variation in operational efficiency can be explained by the debt financing sub-variables. Furthermore, the model’s goodness of fit is assessed through the Wald chi-square test (χ² =72.61, p = 0.000), confirming its statistical significance. The coefficient for the independent variables trade credit, short-term borrowings, and long-term borrowings are (β = 0.331, p = 0.002), (β = 0.642, p = 0.001), and (β = 0.349, p = 0.001), respectively. The p-values are less than 0.05, indicating that the effects of trade credit, short-term borrowings, and long-term borrowings on the operational efficiency of firms listed at the NSE are statistically significant at the 5% level. Conclusion and Implications: The study concludes that debt financing comprising of trade credit, short-term borrowing and long-term borrowing have beneficial effects on operational efficiency. While all three sub-variables of debt financing contribute to enhanced operational efficiency, their application in corporate financing practices varies, with long-term borrowing being a common choice for funding total assets. In light of these findings, company managers should recognize debt financing as a strategic tool for improving operational efficiency. This recognition should be accompanied by a careful and thoughtful approach to utilizing the three components of debt: trade credit, short-term borrowing, and long-term borrowing.

Impact of Financial Reporting on the Financial Performance of Agricultural Firms at the Nairobi Securities Exchange

The study examined the impact of accounting information on the financial performance of agricultural firms listed on the Nairobi Securities Exchange (NSE). A descriptive study design was used, with primary data collected through questionnaires. Quantitative analysis was conducted using SPSS V24 for both descriptive and inferential statistics. The results showed a significant correlation between financial reporting disclosures and the financial performance of agricultural firms listed on the NSE. The study concluded that efficient and timely financial reporting disclosures significantly influence the financial performance of agricultural firms listed on the NSE. The recommendation is for agricultural firms to prioritize efficient and timely disclosure of information to their stakeholders to improve their financial performance. Keywords: Financial Reporting, Financial Performance, Accounting Information, Agricultural Firms and Nairobi Securities Exchange (NSE)

Interest Rate and Volatility of Share Prices of Firms Listed at the Nairobi Securities Exchange, Kenya

Purpose: The study sought to establish the effect of interest rate on volatility of share prices of companies listed at the NSE. The study was anchored the loanable funds theory.
 Methodology: The study employed a descriptive research design. The population of the study was the 20 companies listed at the NSE that forms the NSE share index as of December 2022. The study applied census where all the accessible population of all the 20 NSE share index was used. Data was gathered from secondary sources by the aid of a secondary data collection sheet. Data was obtained from financial and statistical reports released by the CBK. Data was analyzed using descriptive and inferential statistics. The descriptive statistical tools included frequencies, percentages, means, variances and standard deviations. Inferential statistic tools included Pearson’s Product Moment correlation and the multiple regression analysis.
 Findings: The findings indicated that interest rate (β3=0.52939, P=003) have significant positive effect on share price volatility. The study recommended that the monetary committee at CBK should maintain stable interest rates in order to encourage borrowing as it would foster investment in the NSE and other sectors.
 Unique Contribution to Theory, Practice and Policy: The recommendation is in line with the Loanable Funds Theory, as it seeks to establish a reliable and advantageous climate for borrowing. This approach allows businesses and investors to make more effective investment plans, as they can predict the cost of borrowing over time. Additionally, the monetary committee at the Central Bank of Kenya (CBK), responsible for setting the policy rate, should take into account how their decisions influence short-term interest rates in the economy. This consideration is important for the well-being of businesses, investors and the Nairobi Securities Exchange (NSE).

Firm Characteristics and Financial Distress among Manufacturing Firms Listed at Nairobi Securities Exchange Kenya

Businesses including companies listed on stock markets strive to predict financial distress to ensure they manage the factors that could potentially lead to such distress. It is however not clear how the various factors affect financial distress particularly firm size; firm activity levels; firm financial leverage; and profitability given that these are some of the biggest determinants of the financial condition of a business. The lack of clarity results from the fact that there are numerous models of financial distress with each providing varying factors some often contradicting each other. It is therefore critical to evaluate how these affects financial distress among manufacturing firms listed at Nairobi Security Exchange (NSE). This study aims to evaluate how firm size, turnover, leverage and profitability influence financial distress as measured by the B-Ratio. This census survey with a population of 13 companies covers the period 2013 to 2022. Three companies however did not meet the data criteria and were therefore excluded from the analysis. This left 100 firm-year observations. The study utilized four theories of financial distress that include neoclassical theory of investment; liquidity preference theory; pecking order theory; and Wreckers theory of financial distress. The study used panel regression analysis to test the hypotheses that firm size, turnover, leverage and profitability have no significant influence on financial distress. Hausman model specification test revealed that the fixed effects panel regression model was the most appropriate for analysis and it was subsequently used in arriving at the inferential findings. T-test and p-value at 95% confidence interval were used in hypotheses testing. All the four hypotheses set for the study were rejected and it was concluded that size, activity, leverage and financial performance are significant determinants of financial distress. The findings reveal that whereas firm size (as shown by firm capitalization ratio), firm activity level (as shown by total asset turnover) and firm profitability (as shown by return on equity) all had a negative effect on B-ratio, financial leverage had a direct positive effect on financial distress. The study was limited to the 10 qualifying companies at the NSE and has suggested that similar studies could be expanded to non-listed companies, listed nonmanufacturing companies as well as with the use of different models such as hazard models.

Effect of Ownership Structure on Dividend Policy of Listed Firms at the Nairobi Securities Exchange

Ownership structure leads to agency problems since majority shareholders have high levels of incentives hence, they monitor the actions of the management and influence decisions. There has been a growing debate on whether ownership structure impacts on management decisions especially dividend policy decisions. The objective of this study was to determine the effect of ownership on dividend pay-out of listed firms at Nairobi Securities Exchange. The study employed correlation analysis and multiple regression analysis in establishing relationship between types of ownership structures and dividend pay-out. This research was anchored by agency theory and utilized a cross-sectional descriptive research design. The population comprised of 63 listed firms listed in the ten-year Period under consideration. Diagnostic tests and descriptive statistics were carried out afterwards inferential statistics: correlation analysis and regression analysis were applied in hypothesis testing. The study found that an increase in concentration of Managerial Ownership and Foreign Ownership caused an increase in dividend pay-out because cash dividends tend to be higher where the managerial and foreign ownership presence in the board of directors is higher. In addition, state ownership and institutional ownership caused a caused a decrease in dividend pay-out because the state and Institutional Owners prefer cash retention as opposed to dividend distribution in the company.

Effect of Debt Leverage and Debt-Equity Leverage on Financial Performance of Commercial and Services Companies Listed at the Nairobi Securities Exchange, Kenya

Financial performance is very critical for firms, management, and other stakeholders of all organizations. All stakeholders are very interested in performance and are concerned about it. Measuring a company's financial performance helps management in collecting information on how money is invested and how money flows inside and outside the company. The main aim of the investigation was to determine the effect of debt leverage and debt equity leverage and the financial performance of commercial and services companies listed at the Nairobi Securities Exchange, Kenya. The target population was Eleven (11) service and commercial firms listed with the NSE. Purposive sampling was used to sample 7 firms that have been consistently listed in NSE from 2017 to 2021. STATA, a statistical program that assisted in presenting descriptive and panel data models for analysis, was used to analyze the data. There was testing for diagnostic indicators such as normality, autocorrelation, multicollinearity, heteroscedasticity, and linearity. Tables and panel regression tables were used to display the results. Effective citations and participant permission, among other ethical issues, were followed. The research revealed that debt leverage had a sizeable impact on ROA. It was discovered that -debt-equity leverage had a considerable impression on the success of listed businesses and services. However, it was discovered that equity leverage did not meaningfully impact financial success. The policymakers at commercial and service firms should develop policies and regulations that can guide debt management among commercial and service firms. The policymakers at CMA need to develop suitable policies on debt.

Effect Of CEO Compensation on Dividend Payout Policy

Purpose - This study seeks to investigate the association between CEO compensation and dividend payout policy among listed firms in Kenya. Design/methodology/approach - The study used a sample of 40 firms listed in the Nairobi Securities Exchange(NSE) over the period 2009-2019. Data was analysed using fixed and random effect models to test the research hypothesis. Findings - The empirical results show that CEO compensation is significantly and positively associated with dividend payout policy. Practical implications – The study indicates that CEO compensation can be used as a corporate governance mechanism to lower agency conflict. Therefore, the findings offer useful information for managers and regulators in evaluating the effect of CEO compensation on shareholder return. Research limitations/implications - Due to a lack of data on equity compensation, the study cannot conclusively determine the effect of CEO compensation on dividend payout policy. Originality/value - Unlike previous studies that focused on the relationship between CEO compensation and accounting-based measures such as firm performance, this study contributes to the literature by examining the relationship between CEO compensation and dividend payout policy.

Working Capital Management and Financial Performance of Firms Listed under Manufacturing and Allied at Nairobi Securities Exchange, Kenya

In Kenya, the manufacturing industry makes a substantial contribution to productivity, innovation, and economic growth. Despite the significance of the sector, its financial performance remains erratic and unstable over the last few years. Working capital management remains a key factor in explaining financial performance of firms in the manufacturing sector though empirical evidence has not clearly captured the relationship hence the motivation for this research effort. The study sought to assess the impact of working capital management’s cash management, debtors management, inventory management and creditors management on financial performance of firms listed under manufacturing and allied at NSE in addition to determine the moderating effect of inflation on the link between WCM and financial performance of firms in the Kenya’s manufacturing sector. Secondary data was used and the target audience in this study composed of all the eight quoted firms for a period of five years (2018 to 2022). The study revealed that cash management had a significant effect (p=0.0000) below the significance level of 0.05 on financial health of firms listed under industrail and allied at NSE, Kenya. While debtors management had a significant effect (p=0.046) on financial performance whose p-value was below the significance value of 0.05. The Inventory management had no significant effect (p=0.090) on financial performance of firms with a value above 0.05 significant level. Creditors management had an insignificant effect (p=0.144) above the significance level of 0.05. The study found that good cash management and debtor management improved company’s financial health. The study recommended development of cash management policies to direct investment of excess cash for efficient maintenance of optimal cash levels and assured good cash budgeting and planning. Further recommendation included revision of credit policy to enable efficient and prompt monitoring of payments made earlier than due dates, collection efforts to delayed payments and reduce bad debts that may affect the liquidity of the firm hence affect financial performance.

Influence of Capital Risk on Financial Performance of Microfinance Institutions in Kenya

Microfinance Institutions (MFIs) services and activities in Kenya have helped the country reduce its poverty rate, but the country is still among the poorest in the world. Microfinance institutions in Kenya have also reported capital risk in terms of pricing since they have less flexibility to adjust prices due to their financial structure. The main objective of the study is to establish the influence of capital risk on the financial performance of microfinance institutions in Kenya. The study used a descriptive survey research design with a target population of 12 MFIs listed under the Central Bank of Kenya (CBK). The study used a census approach to sample the entire population. The study used secondary data from published CBK reports over a 7-year period from 2015 to 2021. Descriptive statistics are comprised of skewness, kurtosis, and jarque bera. Inferential statistics used were Pearson correlation and hierarchical regression. A study on financial risk factors and financial performance may be of value to the government in policy formation. The microfinance act policy formulators can use the study to ascertain contagious issues that need to be addressed, especially how to handle capital risk challenges. The study may assist the management of microfinance institutions in establishing the problems facing financial risk factors in their sector. Capital risk had a significant positive effect on the financial performance of the Nairobi Securities Exchange in Kenya (t =0.0346763, p<0.05). This model produced an R square of 0.378, implying that 3.78% of the variation in the risks of microfinance institutions is significantly affected by capital risk. Regarding microfinance size, the incorporation of IV*MV, thus interaction terms, moved R squared from 0.337 to 0.378, hence an increase of 0.041. The P value of 0.024 and an R squared increase of 0.041 shows that microfinance size has a moderatingly significant effect on the relationship between capital risk and the financial performance of microfinance institutions. The study rejected the null hypothesis. The findings guided the following recommendations: It was found that capital risk has a significant impact on financial performance; hence, microfinance firms should improve their assets so as to minimize the risks associated with their capital base.

Financial Structure on Liquidity of Manufacturing Firms Listed in the Nairobi Securities Exchange, Kenya

Financial Structure on Liquidity of Manufacturing Firms Listed in the Nairobi Securities Exchange, Kenya

Macroeconomic Indicators and Financial Performance of Insurance Firms Listed at the Nairobi Securities Exchange

Purpose: The general objective of the study was to determine how macroeconomic variables affected the financial performance of insurance firms listed on the Nairobi Securities Exchange. The study's specific goals were to identify how inflation, interest rates, exchange rates and gross domestic product affected those same companies' financial performance.
 Methodology: A descriptive survey research design was used for the investigation. All the six insurance companies listed on the Nairobi Securities Exchange made up the study's target group hence a census-style analysis. The panel regression model was used in the investigation and relied on secondary information that was gathered using a data collection sheet. The five-year period covered by the data was from 2017 to 2021.
 Findings: According to the report, insurance is severely impacted by inflation. There was a general increase in exchange rates and there was a fluctuation in the economic growth. From the findings, the study concludes that the insurance companies were operating on economic conditions that became increasingly challenging as shown by increasing inflation rates. The CBR and lending rates showed a general downward trend in the five years’ period, the exchange rates in the Kenyan economy were changing rapidly, there were major changes in the economic performance of the Country emanating from various occurrences including global oil crisis and COVID-19 pandemic. Despite the harsh economic conditions, the NSE listed insurance companies posted healthy financial performance as shown by ROA values above 5%.
 Unique contribution to theory, practice and policy: The study recommends that the NSE listed insurance companies to make ample adjustment for inflation so that during seasons of high inflation the firms do not run at a loss. The study also recommends the NSE listed insurance companies firms to employ strategies where they can purchase more futures contracts on government bonds or interest rate futures in order to be able to lock-in interest rate and hedge their various portfolios. The NSE listed insurance companies are also recommended to mitigate the exchange rate risks by hedging the foreign exchange risk by purchasing spot contract to cushion against any negative swing. The government through line ministries of finance and planning should undertake measures to ensure good performance of the economy.

Effect of Product Innovations on Strategy Implementation Process of Commercial Banks Listed on Nairobi Securities Exchange

Purpose: The purpose of the study was to establish the effect of product innovations on the strategy implementation process of commercial banks listed on Nairobi Securities Exchange.
 Methodology: The study applied descriptive research design. The study targeted 159 participants including senior managers, credit officers, accountants, human resource managers, operations managers and relationship officers from each of the 11 NSE listed Kenyan commercial banks. The size of sample size was 69 selected using stratified random sampling method. The independent vriable (product innovations) was assessed by looking at new products adopted by banks such as credit cards, insurance products, new deposit accounts and mortgages while dependent variable (strategy implementation process) was assessed through operationalization and institutionalization of strategy. The study utilized research questionnaires for collecting primary data. The distribution of the questionnaires was done by dropping them to the respondents and collecting a week later. Descriptive and” inferential statistics were utilised for data analysis.
 Findings: The study established the product innovations adopted by the bank were mortgages represented by 97%, credit cards (95%), new deposit accounts (90%) and insurance products (49%). It was established that few banks had embraced insurance products probably because of many insurance agencies in the market. The study found that a unit increase in product innovations results to 0.706 increase in strategy implementation process in commercial banks listed in NSE in Kenya.
 Unique contribution to theory, practice and policy: The study concluded that product innovations have a substantial effect on strategy implementation process in commercial banks listed in NSE in Kenya The study recommended that managers at banks should consistently make an effort to invest in innovative product designs and modify the current products in order to enhance strategy implementation process. The research also recommends future studies should explore the factors affecting the execution of strategies in financial institutions in Kenya, beyond just commercial banks. This would encompass SACCOS, microfinance institutions, and mortgage companies.

Does Earnings Quality Affect Investment Efficiency? Evidence from Listed Firms in the Nairobi Securities Exchange of Kenya

Aim/purpose – This paper aims at examining the impact of earnings quality on investment efficiency. The motivating factor is occasioned by poor financial reporting quality standards, higher costs of investment that characterize most developing countries and in particular Kenya where agency problems and insufficient information sent to the public by managers are rather severe and likely to lead to inefficient investment. Design/methodology/approach – This study uses a sample of 28 Non financial firms listed in the Nairobi Securities Exchange and data for the period 2010-2020. Data was analyzed through fixed effects regression analysis. Findings – The study finds a positive link between earnings quality and investment efficiency of firms listed in the Nairobi Securities Exchange. Specifically, high earnings quality increases investment efficiency and improves investment project selection by reducing information asymmetry between managers and shareholders. Research implications – Based on the results, the study recommends that since earnings quality enhances investment efficiency, firms need to strengthen internal mechanisms and increase earnings quality. Besides, corporate shareholders should pay more attention to the earnings quality to gain more return on their investment opportunities. Further, it is necessary for shareholders to continuously monitor the firm's activities and prevent adverse activities from harming their interests.