THE ROLE OF CORPORATE TAX ON THE RELATIONSHIP BETWEEN FINANCING SOURCES AND PROFITABILITY OF MANUFACTURING FIRMS LISTED AT NAIROBI SECURITY EXCHANGE IN KENYA
Ogata Osoro Benjamin - Masters Student, Kisii University, Kenya
Dr. Andrew Songoro Nyang’au (PhD) - Department of Accounting and Finance, Kisii University, Kenya
Dr. Yobes Benjamin Nyaboga (PhD) - Department of Accounting and Finance, Kisii University, Kenya
ABSTRACT
The study assessed the role of corporate tax on the relationship between financing sources and Profitability of manufacturing firms listed at Nairobi Securities Exchange in Kenya. The specific objective was to assess the effect of debt financing on Profitability of manufacturing firms. The study was based on Simulation theory. The descriptive and cross sectional research design were employed in the study. The population of the study was 9 manufacturing firms with Purposive sampling technique used to arrive at 8 firms. Published financial statements were used to collect secondary data. Researchers ‘supervisors’ opinion tested validity. Descriptive statistics and multiple regression analysis were used to analyze data. Based on the findings, the study concluded that both short term debts and long term debts were used by manufacturing companies listed in NSE, Kenya. The study also concluded that debt financing was negatively correlation effect and statistically significant on profitability. Finally corporate tax had a positive correlation effect and was not significant on financing sources and profitability. Based on correlation analysis, the study recommended that companies to look for better means of reducing their debt financing since it was found to affect profitability negatively. The study recommended for tax relief clams to be put in place to improve on the relationship between corporate tax and Profitability.
