26 research outputs found
Can Offer Size and Transaction Volume Predict IPO Underpricing? Evidence from Emerging Markets in Africa
No full textThe debate on why firms underprice initial public offering (IPO) has never been laid to rest. Driven by this phenomenon of IPO underpricing, this paper sought to examine the determinants of IPO underpricing in developing countries, using African countries as a case study. Specifically, the study examined the effect of offer size and transaction volume on IPO underpricing. Panel data was collected for all firms that issued IPOs in Nairobi Securities Exchange, Egyptian Exchange and Johannesburg Stock Exchange for a period of fifteen years (1996 to 2011). The results showed that transaction volume had a negative and significant effect on IPO underpricing (β = -0.074; p<0.05) while offer size had no significant effect (β = -0.035; p>0.05). The study recommends that issuers should take special consideration on transaction volume to maximize the return to investors.
Keywords: IPO Underpricing, Offer Size, Transaction Volume, Emerging Markets & Africa
Determinants of Domestic Savings Mobilization Among the Rural Poor, The Contribution of Table Banking in Kenya
No full textThis study examined the determinants of domestic savings mobilization among the rural poor in Uasin-Gishu county, Kenya. The general notion is that the subsistence farmers are too poor to save. This seems to be unfounded given the fact that they are general excluded from formal financial services and studies on poverty in the country show that the average propensity of the rural households to save is higher than the national average. What are the factors which motivate small scale farmers to save? The study was conducted on 446 table banking groups under the aegis of JOYWO, a table banking grouping in Kenya. Data was collected using structured questionnaires from members of groups under the umbrella of JOYWO. The findings of the study indicates that household income had a positive and significant effect on savings mobilization while dependency ratio had a negative and significant effect on savings mobilization. Household size was not significant. The results point to the need to expose the rural poor to informal savings and financing models expected to enhance income generating capabilities of the rural poor and lower the level dependency through government welfare funding for senior citizens and essential services for the young Keywords: Savings mobilization, Table banking, Rural Poor, Joyful Women Group. DOI: 10.7176/RJFA/10-6-02 Publication date:March 31st 201
Influence of Financial Leverage on Financial Sustainability: A Case of Microfinance Institutions in Kenya
No full textMicrofinance institution plays a crucial role in economic development and financial inclusion. Financial sustainability is the key dimension to microfinance institutions growth. This further indicate the importance of which Financial sustainability is. Therefore, the present study investigated the effect of financial leverage on MFI financial sustainability. The specific objective was to establish the effect of financial leverage on the financial sustainability of MFIs. The study was guided by agency theory and life-cycle theory. The study adopted an explanatory research design where a panel approach was used as well as the positivist paradigm. The study adopted the census approach method. Panel data was drawn from 30 MFIs for a period between 2010 and 2018 from the mix market database using the data collection schedule. The study used both descriptive and inferential statistics to analyze data with the help of STATA software. Fixed effect model based on Hausman test (X2 = 45.41, p= 0.000 ≤ 0.05). Based on the findings of the study financial leverage ( the study had a positive and significant effect on the financial sustainability of MFIs. The study recommended MFIs managers to engage in the prudent use of financial leverage so that they enhance their overall profitability and boost investor confidence in their strategic decision-making resulting in financial sustainability. The results have an implication to business managers and policymakers given the vital role in service delivery and the challenges hindering the sector from the realization of financial sustainability in the economy
Audit Committee Effectiveness and Earnings Management Among Publicly Listed Firms in Kenya
No full textObjective: The paper sought to investigate the role of an effective audit committee in controlling earnings management practices.
Design / Methodology: A panel data sourced from the audited financial reports of firms listed at the Kenyan Nairobi Securities Exchange for the periods between 2004 and 2017 were analyzed using a panel regression model.
Findings: Audit committee effectiveness proved an important monitoring mechanism for earnings management. The independence, Meeting frequency, and financial expertise of the audit committee evidenced a negative and significant effect on earnings management.
Practical Implications: Firms need to ensure that their audit committees operate effectively. This is achieved through enhancing their independence, ensuring optimal meeting frequency, and a higher number of members with financial expertise for fewer earnings management.
Originality: The paper suggests the ways through which audit committee effectiveness can be enhanced to reduce earnings management amid rampant global financial scandals
Effect of Ownership Structure on Corporate Diversification of Listed Firms in Kenya: The Moderating Role of Capital Structure
No full textPurpose - This paper aimed to examine the moderating role of capital structure in the relationship between institutional and foreign ownerships on corporate diversification of listed firms at the Nairobi Securities Exchange, Kenya.
Design/Methodology - The target population comprised of all the 65 listed firms at Nairobi Securities Exchange in Kenya. However, the inclusion criteria were based on all firms listed at the NSE from 2003 to 2017.
Findings - Capital structure significantly moderated the relationship between institutional ownership and corporate diversification. However, there was a statistically insignificant moderating effect of capital structure in the relationship between foreign ownership and corporate diversification.
Practical Implications - As to increase diversification, listed firms are suggested to have low levels of capital structure and institutional ownership. Furthermore, low levels of foreign ownership and high capital structure is vital in attaining high diversification levels.
Originality - The study contribution is the moderating effect of capital structure in institutional ownership - corporate diversification linkage
Mediating Effects of Financial Innovations between Behavioral Factors and Financial Inclusion of Micro Enterprises in Kenya
No full textPurpose: Understanding the mediating role of the adoption of financial innovations on the relationship behavioral factors and utilization of formal financial services was the main aim of this research. The behavioral factors examined were self-control, confidence and social proof. The study is premised on behavioral finance theories.
Design/Methodology: The positivist approach and explanatory research designs were adopted to understand the relationships between the variables under investigation. A sample of 486 owners/managers of licensed micro-enterprises in Nairobi, Kenya were selected using stratified random sampling technique. Primary data was collected through a structured questionnaire. Hypotheses were tested using Hayes and Zhao approach for mediation analysis.
Findings: The results showed that financial innovations mediated the relationship between each of the behavioral factors and financial inclusion, that is; self- control (β =.0941, ρ= .00), confidence; (β = .1019, ρ = .00) and social proof (β = .1036, ρ = .00).
Practical implications: The study has brought into fore the mediating role of financial innovations on the relationship between the three behavioral factors and financial inclusion. Thus, practitioners are encouraged give due attention to behavioral factors and financial innovations in policy formulation and programs geared towards optimal utilization of financial services
Accounting Conservatism as a Protective Mechanism: Exploring Its Impact on the Relationship Between Financial Decisions and Likelihood of Financial Distress among Listed Firms in Kenya
No full textPurpose- This study investigates the moderating role of accounting conservatism in the relationship between corporate financial decisions (financial leverage, investment rate, and dividend payout policy) and the likelihood of financial distress among firms listed on the Kenyan Securities Exchange.Design/Methodology- The study analyzed a sample of 45 firms over 14 years from 2008 to 2021, resulting in 630 firm-year observations. Panel logistic regression was employed to assess secondary data from annual financial reports.Findings- Results reveal that financial leverage and investment rate significantly increase financial distress risk, while dividend payout policy has a negative effect. Accounting conservatism moderates these relationships by reducing the impact of financial leverage and enhancing the effect of dividend policy.Practical Implications- Managers should implement conservative accounting practices to align incentives with long-term shareholder interests, ensuring prudent financial reporting and minimizing financial distress risks. Originality- This research contributes to the understanding of financial decisions and distress, offering insights into the role of accounting conservatism in promoting corporate financial stability
Effect of Herding Factor on Investment Decisions among Small and Micro Enterprises in Nairobi County, Kenya
No full textThis study sought to determine the effect of herd factors on investment decisions among small and micro enterprises in Nairobi County. The study was premised on the behavioural portfolio. Positivism paradigm was deployed. The study adopts explanatory research design. The target population were 102,821 firm owners. A sample of 383 respondents was selected using stratified random sampling technique. The collected data were analysed using descriptive and inferential statistics. Linear regression models were used to establish the relationship between herd factors and investment decisions. The findings revealed that herding factors was found to have positive influence on investment decision (P = 0.450 < 0.05). The study recommends that firms should improve on herd factors which improved investment. This would enhance better decision investment decision improving financial performance of the SMEs.
Keyword: Herd factors, Investment decision, SME
Effect of talent management practices and employee engagement on perceived sustainable competitive advantage of commercial banks in Nairobi County, Kenya
No full textIn the modern world, organizations strive to achieve success in form of sustainable competitive advantage. The demand for key position talented and committed employees is high because they help steer the organization to outdo the competition in the marketplace. The purpose of this study was to analyze the effect of talent management practices and employee engagement on perceived sustainable competitive advantage of commercial banks in Nairobi County in Kenya. Guided by resource based view theory, positivism research paradigm and explanatory research design was adopted. The target population was 3,098 employees from 42 commercial banks whereby a sample size of 354 was used. After collecting data using structured self-administered questionnaire, analysis done comprised of descriptive, correlation, factor analysis and hierarchical multiple regression analysis. The results showed a positive and significant effect of talent management practices (β=.727, p =.030<.05) and employee engagement (β=.302, p=.029<.05) on perceived sustainable competitive advantage of commercial banks in Nairobi County. The study concluded that quality level of employees\u27 engagement, and talent management practices enhances the perceived sustainable competitive advantages in various similar working environments and society\u27s confidence in the organization. Managers should make efforts to increase employees\u27 perceived organizational fairness to improve their competitiveness. As a result, managers are encouraged to take a deliberate effort to promote talent management practices and employee engagement . Future researchers are expected to focus on firms in other sectors besides assessing the effect of generation Y and generation Z on talent management practices and sustainable competitive advantage
Moderating Effect of Financial Literacy on Relationship between Anchoring and Investment Decision among SMEs in Nairobi County
No full textPurpose: Moderating effect of Financial Literacy on Relationship between Anchoring and Investment Decision among SMEs in Nairobi County. The study was premised on the regrets theory. Methods/materials: The positivism paradigm was deployed. The study adopts an explanatory research design. The target population was 102,821 firm owners. A sample of 383 respondents was selected using the stratified random sampling technique. Multiple hierarchical linear regression models were used to establish moderating effects of financial literacy. Findings: Anchoring factors positively influenced investment decision (β = 0.173, p < 0.05). The study also found that financial literacy moderates the relationship anchoring and investment decisions (β = .92, p > 0.05, ∆R2 = .07). Conclusion/Practical implication; Anchoring enhance investment decisions among the small and medium enterprise. In addition, high financial literacy improves the relationship between anchoring behaviour and investment decisions among SMEs. This would enhance better decision investment decisions improving the financial performance of the SMEs
