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Purpose: MFIs are subject to financial risks, just like all other financial institutions. This is intimately tied to their primary businesses of managing credit and accepting deposits. Therefore, risk management is crucial for MFIs in order to maximize their return on investment. The current study sought to establish the effect of financial risk management practices on financial performance of microfinance institutions in Kiambu County, Kenya. The study focused on establishing the effect of liquidity risk management practices, operational risk management practices, credit risk management practices, and market risk management practices on financial performance of microfinance institutions in Kiambu County, Kenya. The theories anchoring the study comprised of Risk Management Theory, Extreme Value Theory, Credit Risk Theory, and Capital Market Theory. Methodology: A descriptive survey research design was adopted in the study. The target population comprised of 31registered microfinance institutions operating in Kiambu County. The unit of observation comprised of Risk and Compliance Manager, Finance Manager, Operations Manager, Credit Manager, and Business Development Manager from each of the microfinance institution making a total of 155 respondents. A census approach was adopted in the study where all the registered microfinance institutions were involved in the study. Both primary and secondary data was employed in the study where 5-point Likert scale questionnaires were employed to gather primary data while a secondary data collection sheet was utilized to gather secondary data. Both descriptive and inferential statistics were used to analyze the collected data. The statistics were generated by help of Statistical Package for Social Scientist and MS Excel. Findings: The results of the analysis revealed that Liquidity Risk Management Practices, Operational Risk Management Practices, Credit Risk Management Practices, and Market Risk Management Practices positively and significantly affects financial performances of microfinance institutions in Kiambu County, Kenya as shown by beta values of 0.401, 0.309, 0.497 and 0.351 and significant values of 0.000. 0.001, 0.000 and 0.006 respectively. Unique contribution to theory, practice and policy: The results implies that when each of the independent variable is increased with one unit, financial performance of the microfinance institutions increases with the respective beta value of the independent variable. The results led to conclusions that liquidity risk management practices, operational risk management practices, credit risk management practices, and market risk management practices bears appositive and significant effect on financial performance of microfinance institutions in Kiambu County. The study provided recommendations to the management of the microfinance institutions to enhance their practices in areas of liquidity risk management, operational risk management, credit risk management, and market risk management to improve financial performance to a positive and significant level.

This study seeks to assess the relationship between the tax rates imposed on each sub-sector, i.e. betting tax, lottery tax, gaming tax and prize competition tax, and the gross domestic product. The target population for this study include all licenced gambling operators in Kenya. Secondary data was obtained via request from the relevant authorities in Kenya. Regression analysis was performed on the data to model the relationship between the variables. It was found that an increase in the monetary amount of gambling taxes levied from winning punters and gamers would likely lead to a decrease in the GDP, whereas the same increase in the monetary amount of gambling taxes levied from winning lottery players and monetary prize winners would likely lead to an increase in the GDP. The study recommends that a moderate gambling tax regime should be imposed on all other operators except lotteries. Lottery winnings and prize competition winnings tax rates should be increased whereas betting winnings tax rates should be decreased.

Extant literature has globally demonstrated two anomalies of initial public offering stocks performance: positive initial returns and long run underperformance. Kenya’s IPO market is experiencing a downward trend. The last issue was in 2015. Bond market has gained traction compared to equity market. Studies have associated firm specific factors to IPO stocks performance and ignored the moderating variable of automation. The study analysed the relationship between firm ownership, board composition and IPO stocks performance at NSE. The percentage of shares owned by the Kenyan government was used to measure firm ownership and board composition was measured by percentage of executive board members to total board members. The performance of IPO stocks was measured using both Cumulative Abnormal Returns and Buy and Hold Abnormal Returns. Automation was measured by IPO stocks performance between pre and post automation period. The sample size was 15 firms which floated shares between 1994 and 2019 with 2,586 observations. Secondary source was used to collect data. Longitudinal and descriptive study designs were used together with multiple linear regression to analyse the data. To determine between fixed and random effects, the study used Hausman test. It was established that both firm ownership and board compositions correlated negatively with IPO stocks performance. Automation on the other hand was positively correlated with board composition but did not correlate with firm ownership. This study will assist the Kenyan government in developing financial stability measures and investors in making informed decisions.

Performance of IPO stocks depicts two anomalies: initial underpricing and long run underperformance. A plethora of studies have established the causes of these IPO puzzle to include information asymmetry, institutional ownership, IPO size, market volatility, the intrinsic value of the IPO and issue characteristics among others. None of these studies on IPO performance as far as research has shown considered moderating effect of automation of securities market on firm specific factors. Kenya’s equity market capitalization has been on a downward trend being surpassed by fixed income securities. IPO stocks performance offer long-term as well as short-term capital to companies. This study attempts to establish whether there is a nexus between NSE automation and firm specific factors regarding performance of IPO stocks at NSE. Longitudinal and descriptive study designs were used on the secondary panel data. Multiple linear regression was used to analyze the data with Stata statistical software. The Hausman test was used to determine between fixed and random effect model. The results showed that automation had negative correlation with firm age and positive correlation with firm size. The study will assist the Kenyan government in developing financial stability measures and investors in making informed decisions. Keywords: Automation, Firm specific factors, Initial Public Offerings, Nairobi Securities Exchange.

The purpose of this paper is to investigate the effect of investor irrationality on the relationship between investment intensity risk and stock returns in Kenya.The study utilized monthly time series data for 60 companies listed at the NSE over the recent 9 years from 2011-2019. The study employed time series regression using Auto-Regressive Distributed Lag (ARDL) cointegration approach and Error Correction (ECM) estimation techniques to examine whether the effect of investment intensity risk on stock returns will vary with level of investor irrationality. Consistent with theory, investment intensity variable had more positive loadings on small firms with conservative investment policy, implying they have high exposure to investment risk and tend to yield higher returns. The study did not find evidence to support investment intensity risk in Kenya. The Investor irrationality variable is however a significant source of systematic risk and can enhance the predictive power of asset pricing models. The interaction term between investor irrationality and investment intensity was insignificant suggesting lack of moderating effect.The shorter nine year period considered by the study could be a source of small sample bias in the estimation. Sample periods for studies in mature markets span for over decades. In this light, making comparison of the findings in this thesis with those of other related studies may not be feasible. This study is first of its kind to analyze the moderating effect of investor behavior on asset pricing for an emerging market. The paper contributes to portfolio management and asset pricing literature for an emerging market.Practical implication of the findings in this study is that investments at NSE will yield high returns in a bullish market and that portfolio managers can strategically build up their portfolios to allocate more funds in small firms following conservative investment policy to earn higher risk-adjusted returns.

The purpose of this study was to investigate the influence of firm attributes on the financial performance of insurance firms in Kenya. The study was anchored on trade off theory. The research philosophy adopted was positivism while the correlation research design was adopted. The study used secondary data which was collected using data collection sheet from Insurance Regulatory Authority (IRA), Association of Kenya Insurers (AKI) and individual firms’ websites. The target population of the study was 52 insurers that operated in Kenya for the ten years (2010-2018). The unbalanced panel data was analyzed using Random and Fixed effect model where Hausman test was used to establish to test the hypothesis. The study found that leverage and liquidity had a significant negative effect on financial performance of insurance firms in Kenya. The study recommends that insurance firms to embrace feasible financial leveraging strategies that can boost firm profitability. Also, they need to conduct effective liquidity management to maximize the value of the company and its financial performance.

During the period 1994 to 2020, a total of 18 firms in Kenya floated 16,530,781,060 shares at the Nairobi Securities Exchange (NSE) under Initial Public Offerings (IPOs) raising over Kshs 91 billion. These stocks were significantly over-subscribed with the highest hitting 830%. The NSE became fully automated in 2006. Similarly, in Africa between 2010 and 2019 there were a total of 215 IPOs raising over Kshs 1.6 trillion. This could be explained by divergence of opinion hypothesis. The initial returns were positive. However, in the long run, most of the firms underperformed. This under performance leads to losses incurred by investors and possible collapse of brokerage and investment firms leaving investors with a bitter taste. This study will undertake to establish the effects of firm specific factors on IPO stock performance at the NSE in Kenya. The specific objectives will be: to establish the effect of firm size on performance of IPO stocks at the NSE in Kenya, to determine the effect of age of firm on performance of IPO stocks at the NSE in Kenya, to evaluate the effect of firm board composition on performance of IPO stocks at the NSE in Kenya, to establish the effect of firm ownership structure on performance of IPO stocks at the NSE in Kenya, and to analyze the moderating effect of automation on the firm specific factors and performance of IPO stocks at the NSE in Kenya. The study will be built upon major theoretical streams: Random Walk theory, Winners curse theory, Dow Theory, Signaling theory and Agency theory and contextualize them to firm specific factors and performance of IPO stocks. More studies have previously been undertaken on the pricing of IPO at the NSE in Kenya and the few that studied on performance of IPO stocks at the NSE in Kenya have provided mixed findings depending on the methodology used. None of the studies as far as research has shown have considered the automation of NSE in Kenya as a moderating effect of performance of IPO stocks. The sample size will be the same as population of 18 IPO firms between 1994 and 2020 with 8 IPOs during pre-automation and 10 IPOs post-automation period. This will be a longitudinal and event study that will adopt a descriptive study design. Data will be analyzed using the Econometric Views (Eviews). Hausman test, Augmented Dickey Fuller (ADF) test and other diagnostic tests will be applied to the panel data. The Capital Assets Pricing Model (CAPM) and the Nairobi 20 Share Index will be used as the benchmarks of performance of IPO stocks.

Stock market broadly referred to as security exchange has gained so much interests from various stakeholders around the world as they endow exceedingly to the growth of the world economy. Nairobi Securities Exchange, being an emerging stock market, this study therefore considered dividend yield anomaly, measured by dividend per share and price to earnings anomaly operationalized through earnings per share as the types of the fundamental anomalies. When there is fundamental anomaly, firms tend to exhibit unhealthy financial position which is financial distress, measured by Z-Score. The main objective of this study is to examine the relationship between fundamental anomalies and firms’ financial distress; evidence from Nairobi Securities Exchange, Kenya. This study adopts descriptive research design and embraced secondary data from 2007 to 2017 from a target population of 67 listed firms. It was found that there existed a relationship between fundamental anomalies and firms’ financial distress. The study recommends that the management should put in place the right dividend policies, declaration or nondeclaration of dividends in the treatment of dividends. For policy makers and regulators, the recommendations will assist in restoring law and order and this will enable all the stakeholders to have confidence in Nairobi Securities Exchange. Keywords: Securities Exchange, Financial Distress, Fundamental Anomalies.

The main objective of this study was to establish is the difficult question among researchers on the direction of relationship between the stock market performance and the gross domestic product using an empirical evidence from Kenya. Both theoretical and empirical reviews have presented a puzzle especially in the long run relationship between the two variables and empirical investigations in various country contexts , time varying longitudinal periods and other settings have continued to provide conflicting results. The study employed quarterly statistics of the Nairobi All Share Index (NASI) obtained from the Capital Markets Authority Bulletins and quarterly Gross Domestic Product rates from 2012-2019 obtained from Kenya National Bureau of Statistics and applied the Engle granger causality test and establish the link between stock market performance and economic growth in the long run (i.e. whether stock market performance causes economic growth or itself is a consequence of increased economic activity). The statistical techniques used included the unit root Augmented Dickey Fuller (ADF) test in order to test the stationarity for all the time series in their levels and first differences. The Johansen co-integration test to investigate whether the variables are cointegrated of the same order taking into account the trace statistics and the maximum eigen-value tests. The data was transformed into natural logarithms and normalized for further analysis. Both GDP and NASI were found to be stationery at level and upon first difference after ADF tests. The findings were that there was none directional/No causal relationship between the two variables after conducting a pairwise granger causality test, however there was a significant cointergrating equation on the variables, signifying the long run relationship between the two variables. From the results, it was inferred that the movement of stock prices in the Nairobi stock exchange reflect the macroeconomic condition in the long run of the country and can therefore be used to predict the future path of economic growth however the puzzle continues on causality.

The main objective of this study was to determine effect of capital efficiency on default risk in commercial banks in Kenya. According to the bank supervisory report, the interest rate spread widened to 13 per cent at the end of December 2011 from 10.3 per cent by December 2010 which the CBK Governor termed as a sign of inefficiency in the banking sector. Secondary data was used in the study and descriptive survey design was applied. The target population was 42 Commercial Banks in Kenya out of which 2 were under receivership and 1 was under statutory management. Panel data for 39 commercial banks for the six years period from 2014 to 2019 were obtained from the CBK and individual bank websites. The study was guided by Agency theory, Moral hazard theory and Stakeholders theory. Descriptive statistics, correlation analysis and random and fixed effects were used for secondary data using E-views software. The findings indicated correlation coefficients of capital adequacy and return on equity of -0.14 and -0.11 respectively signifying a negative correlation between capital efficiency and non-performing loans. It was recommended that capital efficiency be strengthened to reduce non perfuming loans. JEL: G10; G20; G21 Article visualizations

The Objective of this study is to find out the effect of capital flows on economic growth in Kenya, With Three specific objectives; To investigate the effect of foreign direct investment on economic growth in Kenya, to find out the effect of foreign portfolio investment on economic growth in Kenya, and to determine the effect of diaspora remittances on economic growth in Kenya. Quarterly data from 2002 to 2017 was used in the study, and Descriptive research design and inferential research design were used to analysis the data. Descriptively, mean and standard deviation were used and Inferentially the Auto regressive distribution Lag technique using the STATA software Version 15. Diagnostic tests were conducted on the data; Normality test using Jarque Bera test supported by the skewness and Kurtosis results; Unit root was tested using the Augmented Dickey Fuller Test .The Auto Regressive Distributed Lag regression short run results show that, foreign direct investment had an positive and insignificant effect on gross domestic product, whereas foreign portfolio investment had a positive and statistically significant short run effect on gross domestic product at 1% level of significance and diaspora remittances had a positive and very significant effect of gross domestic product at 5% level of significance. The Error Correction Model regression results showed that in the long run, Foreign Direct Investment, Foreign Portfolio Investment, and Diaspora Remittances had a positive and very significant effect on the economic growth at 1% level of significance.

The purpose of this research study is assessing the relationship between unemployment and its determinants for five east Africa community countries i.e., Kenya, Uganda, Tanzania, Rwanda & Burundi. Particularly, discussed are some economic variables and their significant effects especially in the long run. The study variables include; inflation, GDP growth, population growth and foreign direct investments in relation to unemployment. In order to achieve the research objectives, a methodology framework of panel autoregressive distributed-lag (PARDL) is undertaken. The study finds that a long-run relationship exists among all the variables. Moreover, GDP, POPL, and FDI are found significant to interpret the unemployment in the long-run whereas INF is found insignificant to interpret unemployment in the long-run. The findings also reveal that the tradeoff between inflation and unemployment in EACCs is in the short run and not in the long run. This study concludes that foreign direct investment and gross domestic product have negative and significant relationship with unemployment. Population growth has positive and significant relationship with unemployment and it contributes to unemployment while inflation rate has a positive and insignificant relationship with unemployment. According to the findings of this study population growth is the key determinant of unemployment in EACCs.

The growth of the economy is a concern to many because it has an influence on the progress of a country and its citizens. It is expected that an economy with a highly advanced digital money system should also experience high economic growth. However, statistics indicate that the economic growth rate in Kenya has been fluctuating and has failed to grow consistently despite numerous policy interventions. This study sought to establish the influence of digital money on Economic Growth in Kenya. The study incorporated a descriptive research technique and a time series approach to analyse the relationship between digital money and economic growth using Kenyan quarterly data from 2011 to 2020. Four variables were used as proxies to measure digital money: - the value of mobile money transactions, the value of cards money transactions, the value of internet banking (EFTs) transactions and agency banking. The findings revealed that all relationships that were tested were positive and significant each with p-Value that was less than 0.05. Further analysis showed F-Calculated (1, 38; α=0.05) was 32.909 (card transactions), 247.029 (EFT transactions), 297.118 (mobile transfer), and 571.417 (active agents). Therefore, the study recommended that there is need for an intensified campaign to sensitize the public on the importance of digital money owing to their flexibility and improved security as compared to carrying physical cash especially in the wake of the COVID-19 pandemic. To the policy makers, the findings suggest that there is need to solidify and enforce strong digital/ICT policy that promotes cashless payments.

While airline profitability has remained a challenge over several years, the weakest performance identified by IATA reports was from airlines in Africa and Latin America. The main objective of this study was to determine the effect of leverage, liquidity, and asset tangibility on firm profitability of flag carriers in Africa. Stratified random sampling technique adopted reduced the working population of 23 firms to 4 firms namely Kenya Airways, Ethiopian Airways, Air Mauritius and South African Airways. Data was collected from each airline’s website over a thirteen-year period between 2005–2017. The findings were that leverage had a significant effect that was either positive or negative depending on whether debt is financed by equity or by assets implying that airline managers should endeavour to target cost-efficient sources of capital. Liquidity and asset tangibility were observed to have no significant effect and had little to no explanatory power on financial performance in the selected African airlines. The study recommends implementing a collaborative effort using a tri-partite debt covenant between airline managers, lenders of capital and government. African governments and local lenders should step in to support their Flag carriers by reducing the gaps and costs associated with acquisition of debt and other sources of capital. Airline managers on their part should manage resources efficiently and be held accountable with periodic audits to ensure they are invested in sustainable levels of their airline’s profitability.

The objective of this study was to establish the antecedents of dividend payout among listed non-financial Companies listed in Nairobi Securities Exchanges, Kenya, with four specific objectives; to establish the effect of profitability, capital expenditure, leverage and liquidity on dividend pay-out of listed non-financial companies in NSE. The study was founded on Modigliani and miller hypothesis, signalling hypothesis, birds in hand fallacy, Agency and clientele policy. Using correlation research design, the study examined the antecedents of dividend pay-out of listed non-financial companies listed in Kenya for the period 2008 to 2019. The result showed a positive and significant relationship between dividend pay-out ratio and profitability, liquidity and leverage. It also shows negative association between dividend pay-out and capital expenditure. It was concluded that capital expenditure significantly influences dividend paid out negatively. Interest payment for long term debt takes priority as a charge on the profit made by the company. An improvement of a company's liquidity would lead to a better compensation to shareholder inform of dividend distributions. Listed companies therefore are expected to pay dividends when the companies are performing well because otherwise shareholders may question the proceeding of the announced profit or results to signaling effect. Listed companies should arrange the financing of capital expenditure so as ensure shareholder remains at an advantage and enable the company to recover its cost on capital and expected returns.

The objective of this study was to establish the effects of bank specific factors on stock returns of listed commercial banks in Kenya, with four specific objectives; to determine the effect of capital adequacy on stock returns of listed commercial banks in Kenya, to determine the effect of asset quality on stock returns of listed commercial banks in Kenya, to determine the effect of earnings ability on stock returns of listed commercial banks in Kenya and to determine the effect of liquidity on stock returns of listed commercial banks in Kenya. The Kenyan banking sector instability within the stock market has been of great concern as depicted by continuous fluctuations in the stock prices of listed banks. Studies undertaken in other stock markets displayed mixed findings and much concentration has been on the United States, Turkey and Indonesian stock markets. Hence, a study providing a Kenyan perspective on the link between banks’ internal environment and stock returns of listed banks was crucial. The study was based on market portfolio theory, efficiency structure hypothesis and the buffer capital theory. The research targeted all the 11 listed commercial banks at the Nairobi Securities Exchange. Quarterly data was collected for the period 2010-2019. A pooled panel regression model was used in the estimation of the significance of the impact of the variables. Findings of the research established that capital adequacy and earnings had a significant effect on stock returns. The study recommends that commercial banks should improve their capital base and expand their asset quality through better loan management.

The objective of this study was to establish the effects of bank specific factors on stock returns of listed commercial banks in Kenya, with four specific objectives; to determine the effect of capital adequacy on stock returns of listed commercial banks in Kenya, to determine the effect of asset quality on stock returns of listed commercial banks in Kenya, to determine the effect of earnings ability on stock returns of listed commercial banks in Kenya and to determine the effect of liquidity on stock returns of listed commercial banks in Kenya. The Kenyan banking sector instability within the stock market has been of great concern as depicted by continuous fluctuations in the stock prices of listed banks. Studies undertaken in other stock markets displayed mixed findings and much concentration has been on the United States, Turkey and Indonesian stock markets. Hence, a study providing a Kenyan perspective on the link between banks’ internal environment and stock returns of listed banks was crucial. The study was based on market portfolio theory, efficiency structure hypothesis and the buffer capital theory. The research targeted all the 11 listed commercial banks at the Nairobi Securities Exchange. Quarterly data was collected for the period 2010-2019. A pooled panel regression model was used in the estimation of the significance of the impact of the variables. Findings of the research established that capital adequacy and earnings had a significant effect on stock returns. The study recommends that commercial banks should improve their capital base and expand their asset quality through better loan management.

This study looks at micro-economic determinants of long run performance of shares issued in Nairobi Securities Exchange from 1st Jan. 2007 to 31st Dec.2013. Do these selected microeconomic determinants have statistically significant effects on long run return on equity issued in the Nairobi security exchange in Kenya? The study has a total 12 firms that issued shares in the security exchange during this period. In order to achieve the objectives of the study “a calendar study” approach on the issued shares was adopted. Monthly average returns were calculated for a period of 5 years. Nine hypotheses were deduced and executed. Three were based on benchmarks namely: Nairobi Securities Exchange Index (NSEI), Capital Asset Pricing Model (CAPM) and Matching Firms (MF). Along with the 3 mentioned measurement models, other 6 micro-economic variables were incorporated in the study; firm size, offer size, stock turnover, book/ market ratio, age and quality of underwriter. A panel data multi-regression and single regression analysis were run to examine the relationship between average return and micro-economic determinants on firm performance in the long run. The results of the study showed that the study corresponds with some of results of the previous studies with regard to the long run returns of either under or over performance. The level of under of over performance based on the benchmarks used were that NSEI and Matching firms performed better than firms that issued equity. However firms that issued equity performed better than CAPM as bench mark. The study also revealed that two explanatory variables; Age and Quality of underwriter were statistically significant as determinants of long run performance. Finally two independent variables were found to have positive influence on firms that issued equity in the NSE. In conclusion this study confirmed the results of previous studies done either supporting certain variables as determinants of long run return or do not support certain variables as determinants of long run return.

The objective of this study was to establish the effects of dividend announcement to current market prices at the Nairobi Securities Exchange, with four specific objectives; to determine the information content of dividend announcements, to determine the extent to which prices converge to new values after dividend announcements on a sector by sector basis, to establish the market reaction to announced information and also to establish whether investors can secure excess returns by acting on announced information. A 66 days event timeline was employed from 2005 to 2015 on daily closing stock prices. A sample of 179 dividend announcements from 22 listed companies in 8 sectors were drawn and analysed using an OLS Market Model. Findings of the research conclude that; dividend announcements do have an impact on stock prices for the Agricultural, Banking, Commercial, Construction, Manufacturing and Telecomm Sectors and not for the Energy Sector, Insurance Sector and the Nairobi Securities Exchange Market. It takes more than five days for prices to adjust to their correct values and this makes it possible for market players to profit from the inefficiency by earning abnormal returns. We conclude that the Nairobi Securities Exchange is not semi-strong form efficient.

Trade-off theory of capital structure uses static and dynamic approach. The use of static approach has been prevalent. Despite the importance of dynamic capital structure the debate in Kenya is so far inconclusive. Therefore, to fill this gap, there was need to assess the speed & of adjustment from target capital structure of listed non-financial firms in Kenya. Causal research design was used. The population for this study was 65 listed firms with only 35 non- financial firms sampled due to exclusion of financial sector which has highly regulated capital structure. Dynamic Partial Adjustment model (DPA) was used to estimate target leverage in each industry and the study found out that, there exist a target leverage level which is different from observed lev for each sector. Further, the study showed that, listed firms adjusted to target level with a speed of 51% meaning that, the adjustment costs are relatively low., peer-reviewed

This study investigates the nexus between the market tightness and economic growth in Kenya using data from 2006 – 2015 from Nairobi Security Exchange and Kenya National Bureau of Statistics. A parsimonious moderating regression analysis (MRA) has been presented to examine whether real interest rate and risk premium individually moderates the relationship between stock market tightness (proxied by various versions of spread) and the economic growth (proxied by Real Gross Domestic Product (GDP)) in Kenya. The study shows that both real interest rates and risk premium moderates the relationship between stock market tightness and the economic growth in Kenya.

Foreign exchange is one of the macroeconomic variables which affect the financial performance of firms. Fluctuations in the foreign exchange rate have an effect on the operating cashflows, investment decisions, profits, sales and a firm’s market value. Foreign exchange rate level is determined by various factors which include the balance of payment, terms of trade, inflation and government borrowing. Given the importance of multinational firms to the economy of Kenya, it is crucial to determine the effect of determinants of foreign exchange on their performance. The objective of the study was to determine the effect foreign exchange determinants on the financial performance of multinational companies in Kenya. The independent variables included balance of payment, government debt, terms of trade and inflation. Measurement of financial performance was done using return on equity and return on assets. The study was anchored by the balance of payments theory, Keynesian theory of public debt, theory of international trade and the quantity theory of money. The study sampled four multinational companies operating in the nation of Kenya. The period covered by the study was 2002-2017. Data collected for the study was from both the central bank publications and financial statements of multinational companies. Study data was evaluated using panel data. The fixed effects model was used for the study. The study established that the balance of payments had a negative as well as statistically significant impact on return on assets. The study also established that government debt had a positive and significant effect on return on assets. Terms of trade and inflation were found to have positive but statistically insignificant effects on return on assets. The balance of payment and inflation had a negative and statistically significant effect on the return on equity. The terms of trade was found to have a positive but statistically insignificant effect on the return on equity. Government debt had a positive and statistically significant effect on return on equity.

The main objective of the study was to determine the effect of foreign equity purchases turn-over on the level of volatility at the Nairobi Securities Exchange. The study was twofold as it focused on the effect of foreign equity gross purchases on stock market volatility before and after introducing foreign exchange rate as a moderating variable. The span of the study was eight years from 2008 to 2015 as the period was marked by unprecedented world events such as the global economic recession and the post poll pandemonium in Kenya which subsequently affected foreign equity flows and the volatility in the equity bourse. The research design employed in the study was the causal research design. The target population of the study were the monthly foreign equity gross purchases, monthly Nairobi Securities Exchange 20 share indices and monthly USD Bid-Ask foreign exchange. The study samples in the study were the monthly foreign equity gross purchases, monthly Nairobi Securities Exchange 20 share indices and monthly USD Bid-Ask foreign exchange from May 2008 to December, 2015. Time series secondary data was used in the study. The data was subjected to diagnostic tests such as linearity test, multicollinearity test, normality test, test for homoscedasticity and test for autocorrelation with E-views being the main statistical tool of analysis. The main model used in the study was the vector error correction model subsequent to undertaking stationarity test, lag selection test and cointegration tests. Study results reveal a positive but in-significant effect of foreign equity purchases turn-over on stock market volatility and a negative but in-significant effect after introducing foreign exchange rate as a moderating variable. The study recommends adoption of efficacious cross-border listing rules to spur stock market integration that would subsequently increase foreign investor participation and development of apt financial derivative markets to aid in the mitigation of time-varying foreign currency risks as a consequence of foreign exchange risk exposure.

This investigation looked at the link between firm ownership characteristics and long-run return on firms that issued equity at the Nairobi Securities Exchange (NSE) in Kenya. The study covered 12 firms that issued shares in the NSE market from 2006-2008. Ownership characteristics included (state ownership, institutional Ownership, foreign Ownership, big five shareholders, market capitalization, age of the firm and Leverage of the firm) in relation to the average return. The study tested whether each of the firm ownership characteristics influenced long-run performance. Annual return for these companies was based on market return for five years after the firm’s equity shares were issued. The long-run performance was compared with three benchmarks, namely, NSE index, CAPM and Matching firms. Seven hypotheses were developed for the study. Simple-liner and multi-linear regression analyses based on panel data were carried out to relate the extended run return on shares issued. The result of the survey showed that issuing firms performed better than non-issuing firms. These issuing firms also performed better in comparison to CAPM. However, the issuing firms performed worse than NSEI. In conclusion, the long-run performance of equity issued at the NSE does not necessarily underperform relative to non-issuing establishments.

The study investigates the effect of contemporaneous exchange rate changes on value of multinational nonfinancial companies listed at Nairobi Securities Exchange for period 2001-2016. Unexpected exchange rate changes and lagged exchange rate movements were used as control variables. The study adopted a two staged methodology. The first stage involved the determination of the foreign exchange exposure. At this point the REER is determined as the weighted average of the seven major currencies used by Kenya. The unexpected foreign exchange changes were determined using the ARIMA and GARCH model. The second stage of analysis involves a panel model where different aspects of foreign exchange exposure are regressed on firm value. The results indicated that contemporaneous exchange rate changes have a negative significant influence on the value of nonfinancial companies listed at the Nairobi Securities Exchange. The results of the study were inconclusive on the effects of lagged changes in exchange rates on firm value. The findings of the study reveal that unexpected exchange rate changes have a significant negative influence on firm value.

The main objective of this paper is to examine the effect of financial performance on capital structure of listed non-financial firms in Nigeria. This was guided by assessing the earnings per share on capital structure choice. The causal research design was adopted while a total of 87 samples was included in the study. The estimated results are statistically significant at all levels of Capital Structure. Based on the significance of these results it was concluded that both the efficiency risk and franchise value hypotheses of the reverse causality hypothesis are observable in the capital structure choice of the firms.

The inclination for optimizing returns by taking maximum risk has implications for both individual investors, as well as fund managers. For the former, risk tolerance will determine the appropriate composition of assets in a portfolio, which is optimal in terms of risk and returns relative to the needs of the individual. For fund managers, the inability to effectively determine investor risk tolerance may lead to homogeneity among investment funds. This paper investigates the extent to which financial attributes affect individual investor risk tolerance at the Nairobi Securities Exchange (NSE), Kenya. Financial attributes in this study were measured in two main aspects: individual monthly earnings income and home ownership. A sample of 500 Central Depository System (CDS) account holders was selected from a population of 932,510 investors at the NSE. Single independent variable cross tabulation on risk tolerance as well as paired cross tabulation on the dependent variable was performed. Analysis of variance was also used to determine how each group of the independent variable affects the dependent variable. Ordinal logistic regression model (OLRM) was employed to establish the contribution of financial attributes on risk tolerance. Single independent variable cross tabulation revealed that home owners were more risk tolerant than non owners. However, one way Analysis of Variance revealed that the variable had a P value of 0.710, hence not significantly affecting risk tolerance. The result of ANOVA on income was significant at a P value of 0.014 individual earnings, hence influences risk tolerance. Risk tolerance increased with earnings up to very high, except for those who earned more than 120,000 per month. OLMR fitted well with a significance level of 0.027 less than ?=5%, although it showed that home ownership is not a significant determinant at a P value of 0.761. For every single unit of home ownership for those with homes to those without, the expected log of odds increased by 0.060 as the threshold of risk tolerance increased, holding other factors constant. Income levels for those earning 90,000-120,000 per month showed a P value of 0.006, hence income was a major determinant of risk tolerance. For every single unit increase of investors earning 90,000-120,000, the expected ordered log of odds of risk tolerance reduced by 1.077 as the threshold of risk tolerance increased, holding other factors constant. Therefore fund managers, investment advisors and individual investors should consider the contribution of financial attributes in financial decision making.

The issue surrounding policy makers is whether dividend announcements have information content. This study investigated into this concept to determine the extent, to which dividend announcements have information content, its effect on firm value and what this implied on the semi strong efficiency of the Nairobi Stock Exchange (NSE). A sample of trading delays in each year for the period 1999- 2003 was drawn from firms listed on NSE. The data was purely secondary data of the firms listed on the NSE, stock prices and dividend announcements. The event study methodology was used analyze information content of dividend announcements for the four firms. The results based on an estimation window of more than hundred trading days per year show that, for the analyzed firms, dividend announcements do indeed convey useful information about the future value of a firm. This empirical investigation came up with the following findings: First Dividend announcements have pertinent information, which is consistent with Modigliani and Miller (1958) information content hypothesis. Second, the information content in dividend announcements significantly affects the firm value as shown by large spikes in the graphs. Third the NSE is not semi strong from efficiency and therefore market participants can make abnormal profits by trading on public information, such as dividend announcements.

The main objective of the study is to evaluate the extent to which investors’ education level or specialization in finance or accounting determines investor risk tolerance at the Nairobi Securities Exchange using a total of 500 individual investors out of 9,32,510 investors holding CDS accounts. Data is collected through questionnaires comprising 13-item risk tolerance instrument and demographic attributes that determine individual investors’ risk tolerance. Analytical framework included ordinal logistic regression model, as well as an analysis of variance and Wolfowitz Wald test at α=0.05. The key findings are that investor education level are significant in the determination of risk tolerance only at below the high school level with a positive impact of 1.831 log of odd for every unit increase in risk tolerance. Specialization in finance or accounting discipline also influenced investor risk tolerance at a significance level of 0.022 with a negative impact of -0.389.