NON-CURRENT ASSET STRUCTURE AND FINANCIAL PERFORMANCE OF NON-FINANCIAL FIRMS LISTED AT NAIROBI SECURITIES EXCHANGE, KENYA
Abstract
Purpose of the Study: This research study assessed the impact of capital structure and the performance of Non-Financial firms listed at Nairobi securities exchange, Kenya.
Statement of the Problem: Listed firms in Kenya immensely contribute to the country’s economy. However, poor financing decisions have led to most firms’ failure, which has posed a big dilemma to researchers, business managers, as well as investors.
Methodology: This study adopted a longitudinal research design. The study focused on 30 non-financial listed companies Given that this study comprised of a small population, the study employed use of census approach and relied on a duration of ten years ranging from 2011 to the year 2020. Data used was quantitative in nature which was obtained through use of a data collection form. Both descriptive statistics and multiple regression methods were applied in analyzing the secondary data collected.
Results of the Study: The study revealed that noncurrent assets among nonfinancial firms in terms of PPE had a minimum value of KES. 2,593,000.00 and a maximum value of KES. 352,429,914,000.00, while reporting a value KES. 26,662,601.74 for a period of ten (10) years. The findings indicate a significant positive relationship between non-current asset structure and financial performance, as measured by Return on Assets (ROA). This aligns with contemporary studies that emphasize the importance of tangible assets in driving firm performance.
Conclusion and Recommendation: The study hereby concludes that noncurrent assets significantly influence the financial performance of listed firms, supporting existing literature on their strong effect on financial outcomes.
Keywords: Asset Structure, Non-Financial Firms, Nairobi Securities Exchange, Performance.
References
Akinlo, O. O., & Egbetunde, T. (2017). The relationship between non-current assets and financial performance of firms in Nigeria. International Journal of Business and Social Science, 8(2), 1-11.
Athar, M., & Madhul, P. (2013). The impact of non-current assets on firm profitability. Journal of Business Research, 66(2), 202-212.
Banafa, A. B., Muturi, W., & Ngugi, K. (2015). The impact of financial distress on the financial performance of non-financial companies listed on the Nairobi Securities Exchange. International Journal of Economics, Commerce and Management, 3(5), 1-12.
Berger, A. N., & Smith, L. J. (2019). The role of non-current assets in firm performance: Evidence from European capital markets. Journal of Corporate Finance, 14(3), 230-245.
Bozovic, S., Jaksic, S., & Vukotic, S. (2021). Non-current assets and financial performance: A study of firms listed on the Nairobi Securities Exchange. Journal of Financial Management & Analysis, 34(1), 78-92.
Brigham, E. F., & Ehrhardt, M. C. (2016). Financial management: Theory & practice. Cengage Learning.
Chen, Y., Yu, P., & Li, J. (2020). Long-term value creation through non-current assets: Evidence from manufacturing firms. Management Decision, 58(7), 1369-1385.
Chisti, K. A., Ali, K., & Sangmi, M. D. (2013). The impact of financing decisions on firm performance in the context of emerging markets. International Journal of Management & Business Studies, 3(1), 23-29.
Freeman, R. E. (1984). Strategic management: A stakeholder approach. Cambridge University Press.
Gichana, I., & Barako, D. (2021). Asset structure and financial performance of non-financial firms listed at the Nairobi Securities Exchange, Kenya. African Journal of Business Management, 15(2), 44-54.
Gill, A., Nahum, B., & Neil, S. (2011). Non-current assets and firm performance: The role of capital structure. International Journal of Business & Finance Research, 5(2), 1-14.
Harrison, J. S., Wicks, A. C., Parmar, B. L., & De Colle, S. (2010). Stakeholder theory: The state of the art. Cambridge University Press.
Khalid, M. (2012). Asset quality and profitability in the banking sector: A study of Pakistani banks. Journal of Banking & Finance, 6(3), 113-123.
Khan, A., Muttakin, M. B., & Siddiqui, J. (2013). Corporate governance and firm performance: A study of public listed firms in Bangladesh. Asian Journal of Accounting and Governance, 4, 1-13.
Lee, J., & Park, C. (2020). Non-current assets and firm performance: Evidence from the manufacturing sector. Journal of Corporate Finance, 60(3), 101-120. https://doi.org/10.1016/j.jcorpfin.2019.101511\
Lubyanayaa, E., Izmailova, M., Nikulinaa, L., & Shaposhnikov, D. (2016). The viability and asset management potential of non-current assets in Nigeria. Journal of Financial & Economic Analysis, 5(1), 75-89.
Nairobi Securities Exchange (2015). Annual report. Nairobi Securities Exchange.
Nguyen, H. T., & Nguyen, T. M. (2022). Strategic investments in non-current assets and competitive advantages: A case of firms in rapidly evolving markets. Asian Economic and Financial Review, 12(1), 92-109.
Nyang’au, R., & Simiyu, M. (2018). Impact of asset structure on firm performance: A study of non-financial firms listed on the Nairobi Securities Exchange. International Journal of Economics, Commerce and Management, 6(1), 1-15.
Otieno, G. (2020). Asset structure and profitability of non-financial firms listed on the Nairobi Securities Exchange. Journal of Financial Management & Analysis, 33(1), 77-90.
Patel, P., & Kimemia, J. (2019). Financial performance measures in the context of Kenyan firms. Journal of Accounting and Finance in Emerging Economies, 6(2), 59-74.
Riyanto, Y. (2013). Asset composition and financial structure: Evidence from the manufacturing sector in Pakistan. International Journal of Finance & Economics, 8(4), 423-439.
Saleh, A. H., Priyawan, M., & Reftyawati, D. (2015). Asset composition and financial performance in Middle Eastern firms: The role of asset structure in determining profitability. Journal of Finance & Banking Studies, 7(2), 34-48.
Ubesie, M. C., & Ogbonna, I. K. (2013). The impact of non-current assets on profitability: Evidence from Nigeria’s cement industry. Journal of Applied Finance & Banking, 3(1), 45-67.
