Journal of Finance and Investment Analysis

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

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• 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.

   

  Keywords: Schwarz's inequality, Triangle inequality.