IDEAS home Printed from https://ideas.repec.org/a/spt/fininv/v14y2025i4f14_4_1.html

Capital Structure and Market Value of Non-Financial Firms Listed at Nairobi Securities Exchange in Kenya

Author

Listed:
  • Onyango Collins Omondi
  • Nixon Omoro
  • Luther Otieno

Abstract

This study sought to address the two variable research entitled, “Capital structure and market value of non-financial firms listed at NSE in Kenya. Variables outlay was Capital structure as an independent variable and market value as the dependent variable, which was aimed at addressing the two key objectives; “to establish the effect of capital structure on market value of non-financial firms listed at Nairobi Securities Exchange. The research was based on quantitative approach applying panel data collected from NSE with a population of 32 firms culminating to 320 observations over ten years from 2012-2021. A quantile regression model was applied to test the hypothesis, with the results showing varied outcomes. First, the result showed a significant relationship between capital structure and firms' value under hypothesis one. Finally, the findings could authoritatively be recommended for adoption by stakeholders for making financial management decisions like merger and acquisition, balancing of debt and equity in the capital structure taking into consideration interest rate trends, trading off of debts or investing in new ventures as a result of the availability of cost-effective finances. The result equally can be specifically extended further to; government policymakers, scholars and non-financial sector managers who would find the findings applicable in their areas of specialty besides learning from the challenges addressed at the end of this study.

Suggested Citation

  • Onyango Collins Omondi & Nixon Omoro & Luther Otieno, 2025. "Capital Structure and Market Value of Non-Financial Firms Listed at Nairobi Securities Exchange in Kenya," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 14(4), pages 1-1.
    • Handle: RePEc:spt:fininv:v:14:y:2025:i:4:f:14_4_1
    as

    Download full text from publisher

    File URL: http://www.scienpress.com/Upload/JFIA%2fVol%2014_4_1.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    2. Harvey, Campbell R, 1995. "Predictable Risk and Returns in Emerging Markets," The Review of Financial Studies, Society for Financial Studies, vol. 8(3), pages 773-816.
    3. Rios-Avila, Fernando & Siles, Leonardo & Canavire Bacarreza, Gustavo J., 2024. "Estimating Quantile Regressions with Multiple Fixed Effects through Method of Moments," IZA Discussion Papers 17262, IZA Network @ LISER.
    4. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    5. Stephen A. Ross, 1977. "The Determination of Financial Structure: The Incentive-Signalling Approach," Bell Journal of Economics, The RAND Corporation, vol. 8(1), pages 23-40, Spring.
    6. Anat R. Admati & Peter M. Demarzo & Martin F. Hellwig & Paul Pfleiderer, 2018. "The Leverage Ratchet Effect," Journal of Finance, American Finance Association, vol. 73(1), pages 145-198, February.
    7. Malcolm Baker & Jeffrey Wurgler, 2002. "Market Timing and Capital Structure," Journal of Finance, American Finance Association, vol. 57(1), pages 1-32, February.
    8. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Onyango Collins Omondi & Nixon Omoro & Luther Otieno, 2026. "Joint Effects of Capital Structure, Interest Rate Sensitivity and Market Value of Non-financial Firms Listed at Nairobi Securities Exchange in Kenya," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 15(1), pages 1-2.
    2. Dawood Ashraf & Mohsin Khawaja & M. Ishaq Bhatti, 2022. "Raising capital amid economic policy uncertainty: an empirical investigation," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-32, December.
    3. Anicet Clément MIMCHE KOUOTOU & Samuel Roland MAKANI & Damaris CILINOU, 2019. "Analysis of the effect of the financing structure on the creation of value in Cameroonian SMEs in the commerce and distribution sector," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 10(1), pages 81-102, June.
    4. Andres, Christian & Cumming, Douglas & Karabiber, Timur & Schweizer, Denis, 2014. "Do markets anticipate capital structure decisions? — Feedback effects in equity liquidity," Journal of Corporate Finance, Elsevier, vol. 27(C), pages 133-156.
    5. Mustaruddin Mustaruddin & Aristya Dinata & Wendy Wendy & Anwar Azazi, 2017. "Asymmetric Information and Capital Structure: Empirical Evidence from Indonesia Stock Exchange," International Journal of Economics and Financial Issues, Econjournals, vol. 7(6), pages 8-15.
    6. Shoaib Khan & Tahir Akhtar & Ameen Qasem, 2024. "Dynamics of capital structure determinants: empirical evidence from GCC countries," Future Business Journal, Springer, vol. 10(1), pages 1-18, December.
    7. Drobetz, Wolfgang & Pensa, Pascal & Wöhle, Claudia B., 2004. "Kapitalstrukturtheorie in Theorie und Praxis: Ergebnisse einer Fragebogenuntersuchung," Working papers 2004/09, Faculty of Business and Economics - University of Basel.
    8. Ana Venâncio & João Jorge, 2022. "The role of accelerator programmes on the capital structure of start-ups," Small Business Economics, Springer, vol. 59(3), pages 1143-1167, October.
    9. Thi Hong Hoang & Călin Gurău & Amine Lahiani & Thuy-Luu Seran, 2018. "Do crises impact capital structure? A study of French micro-enterprises," Small Business Economics, Springer, vol. 50(1), pages 181-199, January.
    10. Michel Poitevin, 1989. "Information et marchés financiers : une revue de littérature," L'Actualité Economique, Société Canadienne de Science Economique, vol. 65(4), pages 555-589.
    11. Steele C. West & Amin W. Mugera & Ross S. Kingwell, 2021. "Drivers of farm business capital structure and its speed of adjustment: evidence from Western Australia’s Wheatbelt," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(2), pages 391-412, April.
    12. Zarina Abdul Salam & Roghayeh Shourkashti, 2019. "Capital Structure and Firm Performance in Emerging Market: An Empirical Analysis of Malaysian Companies," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 9(3), pages 70-82, July.
    13. Michael Espindola Araki & Henrique Castro Martins, 2022. "Integrating uncertainty and governance into a capital structure puzzle: can risk-taking and rule-taking explain zero-leverage firms?," Review of Managerial Science, Springer, vol. 16(6), pages 1979-2034, August.
    14. Carmelo Intrisano & Anna Paola Micheli & Anna Maria Calce, 2021. "Financial Structure: A Comparative Study between European Listed and Unlisted Companies," International Journal of Business and Management, Canadian Center of Science and Education, vol. 15(11), pages 111-111, July.
    15. McGuinness, Paul B., 2021. "Board member age, stock seasoning and the evolution of capital structure in Chinese firms," International Business Review, Elsevier, vol. 30(3).
    16. Ahmed Nahar Al Hussaini, 2018. "Factors Affecting Debt to Equity Mixture in Kuwait, Bahrain and Oman," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 8(12), pages 1204-1218, December.
    17. Srinivasan Balakrishnan & Isaac Fox, 1993. "Abstract," Strategic Management Journal, Wiley Blackwell, vol. 14(1), pages 3-16, January.
    18. Aysegul ERTUGRUL, 2023. "Investigation of the Relationship between Corporate Governance and Capital Structure in Insurance Companies with Panel Regression Analysis," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 17(1), pages 107-130.
    19. Mai, Nhat Chi, 2012. "Market timing, taxes and capital structure: evidence from Vietnam," OSF Preprints t3mvs, Center for Open Science.
    20. Barclay, Michael J. & Fu, Fangjian & Smith, Clifford W., 2021. "Seasoned equity offerings and corporate financial management," Journal of Corporate Finance, Elsevier, vol. 66(C).

    More about this item

    Keywords

    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spt:fininv:v:14:y:2025:i:4:f:14_4_1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Eleftherios Spyromitros-Xioufis (email available below). General contact details of provider: http://www.scienpress.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.