Effect of Equity on Financial Performance of Listed Insurance Corporations In Kenya

2023-08-12T07:21:54+00:00

Efforts to revive ailing corporations across the world have mostly been centered on financial restructuring and re-engineering. Slow growth in the financial performance of insurance companies in Kenya coupled with low market penetration rate motivated the researcher’s interest to investigate the effect of Equity on financial performance of these organizations. Three theories namely the Modigliani and Miller Theory, the Pecking Order Theory, and the Trade Off Theory guided the study. The concepts of capital structure and financial performance as well as empirical literature are discussed in chapter two. A descriptive research design was adopted to describe the relationship between the variables of the study. Whereas equity capital forms the independent variable, financial performance as measured by ROA formed the dependent variable. The target population was a census of all insurance firms listed at the Nairobi Securities Exchange (NSE). The study used secondary data extracted from the annual financial reports of respective firms from 2016 to 2020. Data coding and analysis was done using version 28 of the SPSS and STATA version 18 software while financial ratios were calculated using Microsoft Excel spreadsheet. The data was then summarized using descriptive statistics which included the standard deviation and weighted means. There were significant positive correlations between ROA and Equity Ratio, suggesting that higher equity was associated with better financial performance (ROA). Overall, the findings indicated that Equity had a positive correlation with financial performance according to regression and panel data analysis. The study recommends that insurance corporations should prioritize equity over debt in their capital structure decisions so as to increase their financial performance

Determinants of the Growth of Venture Capital in Nairobi City County, Kenya

2023-09-04T02:43:23+00:00

Venture capital investment is concept that has increasingly attracted an attentions and expansion in the recent past. Many developed countries have so far embraced this increasing the production firms increasing and improving their national income generation and thus spurring economic growth. On the other hand, this is not the case with developing countries. Thus, this study seeks to examine the determinants of venture capital investment among developing economies, in which the case study was Kenya. The study objectives were; to examine the effect of financial innovations on the growth of venture capital in Nairobi city County, Kenya; to assess the influence of corporate governance on the growth of venture capital in Nairobi City County, Kenya; to establish the effect of diversification on the growth of venture capital in Nairobi City County, Kenya. Four theories underpinned the study that is the pecking order theory, portfolio theory and stakeholder theory and resource-based theory. Also, this study employed a descriptive design. The target population for the current study was a total of 33 venture capital firms operating within Nairobi City County. The respondents were a total of 33 fund’s managers, and 76 employees from the firms making a total of 109 respondents. Questionnaires be used in primary data collection. The validity and reliability were ascertained through content validity where a research expert and supervisor were employed for validity while pilot test was conducted to ascertain reliability by calculating Cronbach alpha to measure the internal consistence. The threshold of the Cronbach's bar alpha is 0.7. Data collection was done where questionnaires were distributed to the respondents using the drop and pick method and the respondents were then be allowed a two-week period respond to the questionnaire. Collected data were then be analysed using descriptive statistics, that is, frequencies, percentages, standard deviation, and mean. A Statistical Package for Social Sciences (SPSS) was used for data analysis. Findings were presented using bar charts, graphs, and diagrams for the purpose of easy analysis and interpretation. The study further conducted six diagnostic tests to ascertain normal distribution of data and to check internal consistence. Lastly, the study was done under strict ethical considerations that is an introduction letter was sought from the university, and research permit sought form the national commission for science, technology and innovation and respondent. From the results, three variables financial innovations, corporate governance and diversification depicted a positive and significant influence on the growth of venture capital in Nairobi County, Kenya. This implies that holding the three factors (FI, CG, and D) constant, the growth of venture capital in Kenya improved by 0.542 units at 0.008 level of confidence.

International Journal of Current Aspects in Finance, Banking and Accounting

Effect of Equity on Financial Performance of Listed Insurance Corporations In Kenya

Determinants of the Growth of Venture Capital in Nairobi City County, Kenya