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Research Paper | Financial Engineering | Kenya | Volume 3 Issue 5, May 2014 | Popularity: 7 / 10

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Impact of Conservative Financing Policy on Profitability of Listed Companies at the Nairobi Securities Exchange; Kenya

Magadi S. Oloo, Junge H. Bwire, Nyangau B. Onguso

Abstract: Working capital financing is one of the pertinent issues in working capital management; it impacts both on the liquidity and profitability of firms. The objective of this study was to determine the impact of conservative financing policy on the profitability of Kenyan companies listed at the Nairobi Stock Exchange (NSE). Even though a number of studies about working capital have been carried out in Kenya; the impact of conservative policy on profitability is not explicit. This research therefore aimed to determine how conservative financing policy impacts on profitability of Kenyan Listed firms. The study employed a descriptive research design and survey research method. The population comprised of the financial managers of 38 companies listed at the Nairobi Securities Exchange. A census method was employed whereby the sample was equal to the target population. Both primary and secondary data was collected and processed using SPSS Version 21. According to the findings obtained from inferential statistics conservative financing policy had a positive effect on the profitability of listed firms. The study therefore recommends that Kenyan listed firms should embrace conservative financing policy in order to improve their profitability.

Keywords: Conservative Financing Policy, Profitability, Working Capital Management, Corporate Finance, Liquidity and Risk

Edition: Volume 3 Issue 5, May 2014

Pages: 1397 - 1401

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