Corporate Restructuring, Firm Characteristics and the Financial Performance of Companies Listed at the Nairobi Securities Exchange, Kenya

H.K. Isabwa¹

Section:Research Paper, Product Type: Journal-Paper
Vol.8 , Issue.10 , pp.11-20, Oct-2022

Online published on Oct 31, 2022

Copyright © H.K. Isabwa . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
 

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Abstract :
Firms should adopt corporate restructuring to improve their financial performance. However, after the restructuring exercise, some of the companies end up earning high profits, others low profits while others make high losses. It is on the basis of this purview that the current study sought to assess corporate restructuring, firm characteristics and financial performance of companies listed at the Nairobi Securities Exchange, Kenya. The specific objectives were to; determine the effect of financial restructuring and portfolio restructuring on the financial performance of companies listed at the Nairobi Securities Exchange. The study also sought to determine the moderating effect of firm characteristics on the relationship between corporate restructuring and the financial performance of companies listed at the Nairobi Securities Exchange. A positivism research philosophy was adopted. The study adopted an ex-post facto research design. The target population was 59 companies listed at Nairobi Securities Exchange. The sample size was 51 companies which were selected using simple random sampling technique. The study used only secondary data for the period between 2017 and 2021. The data collected was analyzed using both descriptive and inferential statistics. Stata version 17.0 aided in analysis. The results were as follows; financial restructuring (? = 0.7510, p=0.000); portfolio restructuring; (? = 0.3581, p=0.000); leverage (? = -0.0593, p= 0.000) and firm size (? =0.2850, p= 0.5113). The study concluded that corporate restructuring has a significant positive effect on financial performance. The study recommended that firms should continue to practice corporate restructuring as it contributes to improvement in financial performance.

Key-Words / Index Term :
Corporate Restructuring, Firm Characteristics, Financial Performance, Kenya

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