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

Relationship Between Microeconomic Characteristics and Leverage Among Companies Listed in East Africa Securities Exchanges

Leverage levels ought to be continuously monitored in any corporate since an uptake of huge amount of debts may trigger possibilities of financial distress especially if the debt is not serviced on time. There are costs associated with the amount of debt and if poorly constituted then there are chances of incurring huge financing costs. The current study was triggered on the need to understand whether profitability, firm size and asset structure have significant influence on leverage ratio among companies listed in East Africa. The study was informed by pecking order theory and Modigliani and Miller theory. The study adopted panel-correlation research design. A panel data set of 65 listed companies over the 2009-2013 period of analysis was analysed using panel data analysis methods. Results of the study showed profitability had a negative and significant influence on leverage while both firm size and asset structures had positive and significant influence on leverage. The study recommends that measures should be put in place to increase profit levels and increase listed company’s asset base. Business operations should be intensified and debt levels to be closely monitored to mitigate the possibilities of financial distress. Keywords: Leverage, Profitability, Firm Size and Asset structure

CAPITAL STRUCTURE DETERMINANTS AMONG COMPANIES QUOTED IN SECURITIES EXCHANGE IN EAST AFRICA

Abstract Capital structure decision plays an important role in shareholder's wealth maximisation. Poor capital structure decision will result to high overall cost of capital and consequently low capital projects net present values. Based on the need to have firm's optimal capital structure the currents study sought to find the determinants of capital structure among quoted firms in East Africa securities exchange. Specifically, the study aimed; to find out the relationship between profitability and capital structure, to establish the relationship between growth and capital structure, to find out the relationship between firm growth and capital structure, to establish the relationship between firm size and capital structure, to find out the relationship between asset structure and optimal capital structure and to determine the relationship between cost of capital and capital structure. A panel data set of 65 companies which were listed and actively trading over the 2009-2013 period of analysis was analysed using panel data and descriptive analysis. The analysis showed a positive insignificant relationship between profitability, growth, firm size and capital structure and significant positive relationship with asset structure. Further, there was a negative insignificant relationship between cost of capital and capital structure