The Influence of Financial Constraints on Corporate Investment Decisions amongst Firms Listed At the Nairobi Securities Exchange
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Date
2015-05
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Daystar University
Abstract
The purpose of this study was to analyse the influence of financial constraints on corporate investment decisions amongst firms listed at the NSE. The study’s objectives included to find out the nature of financial constraints that influenced firms listed on the NSE; to investigate the types of corporate investment decisions made by firms listed in the NSE; to find out the extent to which financial constraints influenced corporate investment decision amongst firms listed at the NSE and to ascertain how the listed firms at NSE overcame challenges associated with their financial constraints. Primary data was collected by use of questionnaire from 17 firms listed at the ten categories in NSE as at year 2013. The data was later analysed using SPSS. Multiple regression analysis was done to examine the relationship among firm’s size, dividend pay-out ratio, firm’s age, and corporate investment decisions. The study findings revealed that most firms listed at the NSE financed their investment decisions by two of the three available source of finance – equity, retained earnings and debt capital. Consequently, the study also found out that the firms listed at the NSE had to forgo some of their investment decisions due to restriction impounded by the firm’s dividend policy. It also emerged that there was a negative relationship between dividend pay-out ratio and the investment. In the view of the findings, the study recommends that the management of the firms should find appropriate forums to educate the shareholders on the benefits of utilizing retained earnings for investments as opposed to going for external sources of financing, and also that the management of the firms listed at the NSE should not only expand their businesses but should explore ways of venturing into new business lines. The future study should include more variables not used in this study for measuring financial constraints like earnings, liquidity and debt rating.
Description
Master Of Business Administration
In Finance
Keywords
Financial Constraints, Corporate Investment Decisions, Nairobi Securities Exchange
Citation
Jamal.Kevin. The Influence of Financial Constraints on Corporate Investment Decisions amongst Firms Listed At the Nairobi Securities Exchange. Daystar University, Nairobi.