Financial Knowledge and Retirement Planning among Pension Scheme Members in Kenya

The rising cost of living, increasing life expectancy and high levels of old-age poverty in Kenya implies that many older people cannot afford necessities. Therefore, the need for individuals to plan for their future financial needs through planning for their retirement has become crucial. Unfortunately, most people who save for retirement in Kenya save with the National Social Security Fund (NSSF), which has a low replacement rate. Therefore, financial knowledge plays an indispensable role in influencing an individual’s retirement savings behavior. This paper seeks to establish the influence of financial knowledge on retirement planning in Kenya. The target population was members of the occupational retirement schemes, NSSF and individual retirement schemes in Kenya. A cross-sectional research design was used and a stratified sampling technique to obtain respondents. Using binary logistic regression and primary data from a sample of 332 randomly selected members of pension schemes in Kenya, the study found that financially knowledgeable individuals are more likely to plan comprehensively for their retirement. The study recommends the formulation of training and educational programs on critical financial concepts linked to retirement planning to spur pension schemes to actively participate in retirement savings. Keywords: financial knowledge, retirement planning, Pension schemes, binary logistic regression. DOI: 10.7176/RJFA/12-14-03 Publication date:July 31st 202

Corporate Social Responsibility Disclosure and the Value Relevance of Annual Reports for Listed Banks in Kenya

This study investigated the relationship between corporate social responsibility disclosure and value relevance of annual reports for listed banks in Kenya. To do so, the study used content analysis and financial analysts’ perception to quantify corporate social responsibility disclosure, included by banks in their annual reports. The sample comprised of the annual reports of ten banks listed on the Nairobi Securities Exchange (NSE) over the entire period from year 2010 to year 2015. The study focused on banks due to additional regulation by the Central Bank of Kenya, (CBK). A survey research design was adopted. The study used both primary data and secondary data. Primary data was obtained through survey questionnaires administered on respondents who were financial analysts at a total of sixty one Kenya’s Capital Markets Authority (CMA) licensed firms (investment banks, stock brokers, fund managers and investment advisers) as at 30 April 2016. Secondary data was obtained from the corporate action register and handbook by the Nairobi Securities Exchange, the daily market statistics from the NSE data and annual reports released by the banks. Content analysis program ATLAS.ti 8, OneLook dictionary and Ms Excel 2007 were used for content analysis. Data analysis was carried out using SPSS version 20 and Stata 13. Descriptive statistics and inferential statistics were used for analysis. The results revealed that corporate social responsibility disclosure had a positive and significant relationship with value relevance of annual reports which was measured by the average market price per share, (MPS). This study therefore concluded that corporate social responsibility disclosure in annual reports of listed banks in Kenya affect the value relevance of the annual reports. The study recommends an expanded role of the auditor in reviewing the corporate social responsibility disclosure and other accounting narratives. Currently in accounting reporting, the auditor is not obligated to formally audit accounting narratives. Instead, an auditor reviews the accounting narratives to ascertain if the narratives are consistent with the financial statements. The study also recommends more guidelines and regulations in relation to non-financial disclosures to ensure that firms put clearer information in the hand of investors

Board Effectiveness and Stock Liquidity Empirical Evidence at the Nairobi Securities Exchange

The aim of this paper was to assess the influence of the board effectiveness on the stock liquidity of firms listed at the Nairobi Securities Exchange. The success of security markets highly depends on stock liquidity. The ease of buying and selling of securities in the stock market while not bringing any effect on the prices. Board effectiveness has been found to play a key role as an aspect of corporate governance on firms’ financial performance but its role still remains unclear on stock liquidity of firms listed at the NSE. It is on this merit that this paper sought to fill the existing gap by establishing whether the board effectiveness influences stock liquidity of firms listed at the NSE. A census was carried out on all the 68 firms listed at the Nairobi securities exchange for the period spinning from 2014 to 2018. This study used secondary obtained from the NSE and the listed firms’ published annual financial reports. Data analysis was done using descriptive and inferential statistics. Under descriptive statistics; mean, median, minimum, maximum, and standard deviation were used and for the inferential statistics correlation and regression analysis within panel data framework were used. Data was subjected to diagnostic tests with Eviews 7 as the main statistical tool of analysis. The findings of the study indicated that board effectiveness had positive and significant influence on stock liquidity of firms listed at the NSE when quoted spread was used as measure but no significant influence when measured by turnover, illiquidity and liquidity ratio. This study recommended that more monitoring needs to be done to enable firms to reduce transaction cost. Key Words: Board Effectiveness, Stock Liquidity, Nairobi Securities Exchange. DOI: 10.7176/RJFA/12-10-12 Publication date:May 31st 202

Effect of Inventory Management on Financial Performance of Firms Funded by Government Venture Capital in Kenya

The purpose of this study was to investigate the effect of inventory management on the financial performance as well as to explore the moderating effect of political environment on the financial performance of firms funded by Government Venture capital in Kenya.  The target population comprised all firms funded by government venture capital in Kenya. Twenty four firms had been funded by government venture capital through ICDC as at 31stDecember, 2013. The study adopted a census approach because of the small number of firms. The study reviewed both theoretical and empirical literature on inventory management.  From the review of related literature, a comprehensive conceptual framework of argument of the relationship between inventory management and firm financial performance was formulated.    Based on the conceptual framework, a questionnaire was formulated and with the use of Cronbach’s Co-efficient Alpha the instrument’s validity and reliability was tested through a pilot study.  The pretested questionnaire was used to collect primary data for the independent variables while a record survey sheet was used to collect secondary data for the dependent variable.  Out of 72 respondents, 51 responded, being 71%. Statistical package for social sciences (SPSS) version 20.0 was used as the statistical tool for analysis of the data. Normality tests were carried on the dependent variable.  Multi collinearity and homoscedasticity tests were carried out on the independent and dependent variables respectively.  Quantitative data was analyzed and described using descriptive and inferential statistics.  Scatter plots were used to test if linear relationships existed after which inferential statistics analysis for every variable was made.  There are few studies in Kenya on Cash flow management and financial performance and therefore this study was an attempt to fill this gap and provide empirical evidence on the effect of cash flow management on the financial performance of firms funded by government venture capital in Kenya. Keywords: Working capital management, financial performance, inventory management, EOQ

Significance of Accounting Information on Equity Share Investment in Nigerian Listed Companies

This study investigated the significance of accounting information on equity share investment in companies listed on Nigerian Stock Exchange. The accounting information variable used to establish the significance of accounting information on equity share investment was net book value per share. The study investigated the influence of net book value per share on equity share investment decision makings in companies listed on Nigeria Stock Exchange. This study used primary data. Data for the study were collected from a sample of 204 respondents from 68 stock brokerage firms in Nigeria. The findings of the study revealed that there is a significant relationship between net book value per share and equity share investment in the listed companies in Nigeria. Specifically, the finding showed that net book value per share has significant influence on equity share investment and was positively correlated with it. This study aimed at providing information that will assist investors in making equity share investment decisions. The findings of this study will assist or guide both potential and existing investors in making investment decisions in listed companies in Nigeria. Keywords:  Accounting information, Equity share investment, Net book value per share,

Inadequate Insurance Claims Reserving and Financial Distress in Non-Life Insurance Companies in Kenya: A Structural Equation Modeling Approach

Financial distress (FD) is a common occurrence in Kenyan commercial sector and is not lacking in non-life insurance companies in Kenya. Several insurance companies have been placed under statutory management for failure to pay genuine claims and other creditors. Insurance companies provide unique financial services, not only to individuals but also to the growth and development of the economy; giving employment to workers and dividends to investors. Financial distress places insurable properties and businesses at risk thus reducing the general public confidence in the insurance sector. For this paper, the goal was to investigate whether inadequate reserving of claims (IRC) causes financial distress in non-life insurance companies in Kenya. In accounting for insurance claims reserves, increases in reserves mean a reduction of profitability of an insurer, whereas a decrease in reserves increases the profitability resulting in higher taxation and payment of dividends, which drains the insurer’s cash flow, thus causing financial distress. Out of 37 non-life insurance companies, registered in 2018 in Kenya, four insurers were subjected to Pilot Testing and another four companies declined to participate in the survey. Secondary data from Insurance Regulatory Authority website was retrieved for calculations of Z-scores as per Altman (1993), amended formula. Primary data was also collected through a questionnaire. A partial least squares Structural Equation Modelling (PLS-SEM) was employed to assess the mediating effect of Insurance Regulatory Association (IRA) supervision on the association between inadequate reserving of claims and financial distress. Goodness-of-fit (GoF) indices were used to assess the model’s goodness of fit. By using the discriminative Z-score formula, 52% of the institutions considered in 2018 were financially distressed, compared to 48% in 2017. However, when considering the average of ten years (2009 to 2018), financially distressed..............Keywords: Non-life  insurance  companies,  Policyholders,  Insurance  Regulatory  Authority,  Claims Reserving, Z-Scores, Structural Equation Modelling DOI: 10.7176/RJFA/12-12-06 Publication date:June 30th 2021

Effect of Group Lending Approach on the Effectiveness of Youth Enterprise Development Fund in Financing Group Owned Agribased Micro and Small Enterprises in Kisii County, Kenya

The purpose of the study was to establish the effect of group lending approach on the effectiveness of the Youth Enterprise Development Fund in financing Group Owned agribased Micro and Small Enterprises in Kisii County, Kenya. A Multistage Sampling Technique was used to sample out 62 MSEs from a target population of 302 Group Owned agribased MSEs. A combined closed and open ended questionnaire was used to obtain primary data. The data was analyzed using both descriptive and inferential statistics. The findings confirmed that group lending reduced the need for loan security and it ensured that the loans were used for the intended purpose. The study thus, recommends that group lending approach be enhanced and improved in terms of streamlining membership numbers to levels minimally conducive for rapid decision making

Capital allowances and Foreign Direct Investment in Listed Manufacturing Companies in Nigeria

Tax incentives have become a global phenomenon as more and more governments try to attract multinational companies and enhance the associated technology spillovers. Capital allowances are allowable as deductions in lieu of depreciation, which are treated as inadmissible for tax purpose. The objective of this study was to establish the effect of Capital Allowance on Foreign Direct Investment (FDI) in Listed Manufacturing Companies in Nigeria. The study adopted descriptive research design and the target population of the study was the 74 Listed Manufacturing Companies with approximately more than 56,000 employees. A sample size of 352 respondents from thirty two (32) manufacturing companies was selected using stratified purposive sampling and respondents were grouped into three strata; that of top, middle and lower management levels. This study used primary data which was obtained from administration of the questionnaires. Data analysis was done using frequencies, mean and standard deviation, while inferential statistics consisted of correlation and regression analysis. The findings show a strong positive linear relationship between capital allowance and foreign direct investment. The paper recommends that tax authority should introduce a policy of carrying over investment allowance that is not utilised to the subsequent year as an advantage to the investors to reduce their tax liability. Keywords: Capital Allowances, Manufacturing Companies, Investment Allowance, Foreign Direct   Investment

Significance of Trends on Enrolment, Budget and Actual Expenditure in the Examination of Higher Education Financing in Tanzania

Financing of higher education in Tanzania is considered a crucial factor in realizing the country’s development vision. It is for these reasons that Tanzania has been financing its higher education since its inception.  Diminishing resource capacity and competing interests for government finance plunged the higher education into financial doldrums.  As a result, the higher education sector was compelled to manouvre through various sources of financing in order to remain relevant to its role in economic development.  The efforts to remain relevant are depicted as the significance of the trends of financing higher education. This study attempted to examine the significance of the trends of enrollment, budget and actual expenditure in Higher Education in Tanzania to sustainable human capital investment from 2005 to 2015. Secondary data were collected from the Ministry of Education and Vocational Training (MoEVT) budgets from 2005 to 2015 from which trends of enrollment, budgeting and actual expenditure were analyzed. The findings indicated an upward trend on both enrolment and financing of the education sector from 2005 to 2015.  The trends were still very low when compared with neighbouring countries.  A huge funding chasm still exists in the budgets of the education Sector.  The challenge lies on how to bridge the gap.  The study suggested that the government diversified sources of financing the higher education, away from the traditional thinking. Keywords: Higher Education, Trends, Cost-Sharing, Budget, Tanzani

Influence of Momentum Effect on Stock Performance of Firms Listed in the Nairobi Securities Exchange

This research article intended to establish the influence of momentum effect on stock performance of firms listed in Kenya. Nairobi Securities Exchange (NSE) is the most robust securities market in Eastern and Central Africa and among the best performing in the African continent. Despite this, there is still a lot to be desired in terms of upholding the efficient market hypothesis. Stocks here do not always uphold this theory despite the fact that the NSE is among the few African exchanges that are not weak form efficient. This study looked at all the listed firms in the NSE for the period between January 2004 to December 2015. The research was based on the efficient market hypothesis and behavioral finance theories. Descriptive research design was used and target population was all the listed firms in the NSE. Secondary data was used in the analysis where the researcher used market prices and risk free interest rates. These were obtained from the data vendors at the NSE and website of Central Bank of Kenya. Caharts four factor model was used in the analysis and hypothesis was tested using 0.05 level of significance. The researcher conducted diagnostic tests such as normality, linearilty and collinearity tests. Missing values in the data collected were corrected by the use of linear interpolation. The diagnostic tests showed that the data was good for analysis. Z test results showed that the momentum effect was statistically significant at 0.0165. The model was also statistically significant showing that the momentum effect influenced the returns for NSE at about 25.8%. the null hypothesis was therefore rejected. It was concluded that NSE stocks over the span of 12 years studied demonstrated momentum effect. Future researchers would be advised to study the momentum effect on a shorter span like 12 months where they are working with weekly prices. The researcher would also recommend future scholars to do a regional comparative study