EFFECTS OF OWNERSHIP STRUCTURE ON FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA
EFFECTS OF OWNERSHIP STRUCTURE ON FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA
Jackline Watiri Macaria - Student, Master of Science in Finance, School of Business, Economics and Tourism, Kenyatta University, Kenya
Moses Odhiambo Aluoch - Lecturer, Department of Accounting and Finance, Kenyatta University, Kenya
Margaret Kosgei - Lecturer, Department of Accounting and Finance, Kenyatta University, Kenya
ABSTRACT
The Manufacturing Sector has been a key contributor to Kenya’s GDP over the last few years. However, from the year 2014 to 2023, the financial performance of manufacturing firms has been deteriorating as evidenced from the declining returns on assets of the 9 manufacturing firms listed at the NSE, Kenya. The ownership structure of a firm influences the financial performance of the company because it governs rules and decision-making processes in all business activities. The general objective of the study is to determine the relationship between ownership structure and financial performance of the manufacturing firms listed at the Nairobi Securities Exchange, Kenya. The specific objectives are to determine the relationship between individual, institutional, government, foreign ownership and financial performance of the manufacturing firms at the Nairobi Securities Exchange, Kenya. To determine the moderating effect of corporate governance on the relationship between ownership structure and financial performance of the manufacturing firms at the Nairobi Securities Exchange, Kenya. The theories that will be informing the study are agency theory, stewardship theory, stakeholder theory and resource dependency theory. The study will embrace a positivism research philosophy. The study will employ a descriptive research design to cover ten years from 2014 to 2023. The study target population is all nine manufacturing firms listed at the Nairobi Securities Exchange, Kenya where a census study technique will be used. Only secondary data will be collected. Panel linear regression model will be adopted. The collected data will be analyzed through descriptive and inferential statistics. Diagnostic tests will be carried out in this study which will include a normality test, multi-collinearity test and heteroscedasticity test. Results of the study was presented in form of tables and graphs. Misconducts such as falsifications and misrepresentation of research work will be avoided in the course of carrying out this research study. Data was normally distributed and there was no multicollinearity. Pearson correlation posed a positive link between individual, government ownership and financial performance whereas institutional, foreign ownership had a negative association. Heteroskedacity was absent in the tested residuals. All the null hypothesis in the study were rejected. Random effect was the considered model. Corporate governance had a positive moderating effect between ownership structure and financial performance.
