Journal Articles
Permanent URI for this communityhttps://repository.kcau.ac.ke/handle/123456789/9
Browse
2 results
Search Results
Item Does executive compensation structure contribute to financial distress? Lessons from Nairobi Securities Exchange-listed nonfinancial firms(International Academic Journals, 2025) Ondabu, Ibrahim Tirimba.; Oyaro, John.; Memba, Florence.; Oluoch, Oluoch.The aim of the study was to determine the effect of executive compensation structure on the financial distress of Nairobi Securities Exchange-listed non-financial firms. The study was anchored on the agency theory. A census of all 45 nonfinancial listed firms at the NSE was carried out using the cross-sectional research design. Secondary data extracted from published financial statements and other annual reports of the respective individual firms for a period of ten years from 2014 to 2023 was employed. In the study the Zscore for emerging economies was used to determine financial distress. Executive compensation structure was measured using the proportion of earnings before interest and tax that was distributed to board of directors. Both descriptive and inferential statistics were used in data analysis. Descriptive statistics included mean score and standard deviation. Inferential analysis was conducted via univariate logistic regression analysis and Pearson's correlation analysis. The study determined that a significant negative correlation exist between executive compensation structure and financial distress (r = -0.811: p=0.000). The study also determined that there exists a strong negative relationship between executive compensation structure and financial distress (β= -0.729: p=0.000). 34.1% to 45.5% variations in financial distress of non-financial listed firms explained by executive compensation structure. Consequently, this study established that for every one-unit improvement in executive compensation, the odds of financial distress decreases by 51.7%. The study therefore concluded that executive compensation structure as a significant negative effect on financial distress implying that an increase in executive compensation may lead the firm into financial distress. The study thus recommends that organisations should design an optimum executive compensation structure which aligns the interests of the management with those of the owners of firms thereby minimizing not only agency conflicts but also agency costs which firms may incur.Item Inflation Rate and Financial Performance of Investment Firms Listed at the Nairobi Securities Exchange, Kenya(Scholarnest Publishers, 2026) Miriti, Brenda K.Abstract Financial performance is a critical indicator of organizations’ overall profitability and health. Return on equity (ROE) is a crucial metric that reflects a firm’s operational efficiency and attractiveness to investors and is commonly used to assess performance across industries. Recent trends in Nairobi Securities Exchange (NSE)-listed investment firms show a concerning decline in ROE, dropping from 10.3% in 2019 to 4.2% in 2022, before a slight recovery to 7.2% in 2023. If unaddressed, the declining ROE may discourage investment, reduce market liquidity, increase borrowing costs, and slow economic development. The study aimed to assess the effect of inflation rate on the financial performance of NSE-listed investment firms. The Quantity Theory of Money guided the research. A descriptive research design was employed to analyze secondary data collected from reliable sources, including the Central Bank of Kenya (CBK), NSE reports, company websites, and Capital Markets Authority (CMA) handbooks. The target population consisted of five NSE-listed investment firms: Olympia Capital Holdings Ltd, Centum Investments Co Ltd, Trans-Century Ltd, Kurwitu Ventures, and Home Afrika Ltd. Given the small number of firms, the study adopted a census approach, analyzing all five companies. Data was processed using Microsoft Excel to compute descriptive statistics, including frequencies, percentages, and measures of central tendency, providing insights into financial trends and macroeconomic influences. The findings indicated that inflation rate had a statistically significant relationship with financial performance, with the model explaining approximately 74.8% of the variation in ROE. The study concluded that inflation rate played a key role in influencing firm performance. The study recommended that investment firms should incorporate macroeconomic indicators into decision making, while policymakers were encouraged to maintain economic stability. The findings benefit investment firms by improving risk management strategies and operational efficiency. Policymakers and regulatory bodies gain insights into external economic factors affecting investment firms, enabling them to formulate policies that foster financial stability. Additionally, academics find value in this study as it expands the body of knowledge on macroeconomic influences on financial performance in emerging markets such as Kenya.