EFFECT OF EQUITY FINANCING ON THE FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS LISTED IN NAIROBI SECURITIES EXCHANGE
EFFECT OF EQUITY FINANCING ON THE FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS LISTED IN NAIROBI SECURITIES EXCHANGE
Joyce Yator - Kenyatta University, Kenya
Dr. Francis Gitagia - Kenyatta University, Kenya
ABSTRACT
Manufacturing sector plays a key role in economic development of Kenya. Data published by the Kenya National Bureau of Statistics shows that manufacturing sector’s contribution to gross domestic product stood at 7.6 percent in 2021. However, the manufacturing sector has experienced fluctuations in its financial performance over the years. In 2020 it contributed 7.9 percent down from 8.4 percent, (2019), 8.7 percent in 2018 and 9.3 percent (2017) therefore the study sought to assess effect of retained earnings on the financial performance of manufacturing firms listed in Nairobi securities exchange. The study was anchored on the pecking order theory. The study used descriptive research design to explore its set objectives. The units of observation were manufacturing firms listed in Nairobi Securities Exchange. The study sampling frame was seven (7) manufacturing firms listed in Nairobi Securities Exchange. Since the target population of the study is small the study adopted census to incorporate all the seven (7) manufacturing firms listed in Nairobi Securities Exchange. The study collected secondary data relating to short term debt, long term debt and retained earnings and ROA of manufacturing firms listed in Nairobi Securities Exchange. Panel regressions analysis and Pearson’s product moment correlation analysis was used for inferential analysis and standard deviations was used for purposes of descriptive analysis. The analyzed data were presented in form of tables and pie charts and bar graphs. From the findings the study concluded that equity financing has a statistical effect on the financial performance of manufacturing firms listed in Nairobi Securities Exchange.
