Factors Affecting the Financial Performance of Listed Companies at the Nairobi Securities Exchange in Kenya

With the increasing trend of sudden corporate failure in both global and local context, shareholders and other stakeholders are increasingly becoming more concerned of the financial performance of their firms. The study therefore aimed to find out the factors affecting the financial performance of listed companies at Nairobi Securities Exchange in Kenya. It was informed by trade off and the agency theories. The study adopted an explanatory research design and 29 listed firms (excluding listed banks and insurance companies) which have consistently been operating at the Nairobi securities exchange during the period 2006-2012 were sampled. Purposive sampling technique was used. The analysis of the data collected from financial statement followed a number of basic statistical techniques. Descriptive statistics (mean and standard deviation) and inferential statistics (Pearson correlation and multiple-regression) were used to analyze data. Pearson correlation was used to ascertain the interrelationship between the variables, whereas multiple-regression was used to assess the extent of the effect of the independent variables on the dependent variable. Study findings showed that leverage had a significant negative effect on financial performance (?1 = -0.289, ?<0.05). Findings also showed that liquidity had a significant positive effect on financial performance (?2 = 0.296, ?<0.05). Company size had a significant positive effect on financial performance (?3 = 0.480, ?<0.05). The study also revealed that company age had a significant positive effect on financial performance (?4 = 0.168, ?<0.05). The study provides some precursory evidence that leverage, liquidity, company size and company age play an important role in improving company’s financial performance. The study suggests that there is need to determine an optimal debt level that balances the benefits of debt against the costs of debt and developing sound techniques of managing current assets to ensure that neither insufficient nor unnecessary funds are invested in current assets as maintaining a balance between short-term assets and short-term liabilities is critical. The study also suggest that firms should expand in a controlled way with the aim of achieving an optimum size so as to enjoy economies of scale which can ultimately result in higher level of financial performance. Keywords: Financial Performance, Liquidity, Leverage, Company Size and Ag

Financial Management Reforms and the Economic Performance of Public Sector in Kenya

The research aimed at determining the impact of financial management reforms on the economic performance of public sector entities in Kenya. The study used the economic unit performance contracting results as the measure of performance. The study’s main objective was to determine the relationship between financial management reforms and the economic performance of the public sector in Kenya. The study used descriptive survey design. The population was the 42 ministries and departments that were in existence during the period of the study.  The study was carried out at the Ministry’s headquarters based in Nairobi. Data was collected from secondary and primary sources for five years between financial years 2007/2008 – 2011/2012.Analysis was done using ordinary least squares (OLS) method. Three types of financial reforms were targeted; budgetary reforms, accounting reforms and auditing reforms. The findings of the study revealed that financial reforms achieved more than half of the intended performance targets over the period under investigation. The results show that budgetary reforms had the strongest explanatory power on performance indicators at 0.681, followed by accounting reforms at 0.47 and audit reforms at 0.387. We therefore conclude that audit reform does not aid in improving performance of public sector entities while budgetary and accounting reforms are the most effective tools. The reason for this misnomer could be that civil servants could have developed a negative attitude against audit and see it as slowing down delivery of services or that audit is a conduit for corruption. More financial and budgetary reforms should therefore be undertaken for improved results. Audit reforms need to be closely reevaluated and new approaches employed to yield better results and economic performance. Key words: Financial reforms, Budgeting, Accounting, Auditing, public secto