INFLUENCE OF LONG-TERM INVESTMENTS ON FINANCIAL PERFORMANCE OF LISTED NON-FINANCIAL FIRMS IN KENYA

Adano Salad Kadubo

PhD Candidate

Jomo Kenyatta University of Agriculture and Technology (JKUAT), Kenya

Prof. Willy Muturi, PhD

JKUAT, Kenya

Dr. John Karanja Ngugi, PhD

Kenyatta University, Kenya

CITATION: Kadubo, A. S., Muturi, W. & Ngugi, J.K. (2019). Influence of Long-term Investments on Financial Performance of Listed Non-Financial Firms in Kenya. Journal of Economics and Finance. Vol. 8 (3) pp 22 – 41.

ABSTRACT

The aim of this paper is to analyze the influence of long-term investments on the financial performance of non-financial firms listed at the NSE. In the Kenyan security market in general, the mixed asset structuring by both financial and non-financial firms listed in the Nairobi Securities Exchange significantly has led to mixed performance indices. The financial sector recorded an improvement of 16% of returns against assets while the non-financial sector recorded only 5.7% of returns against assets. The study focused on non-financial firms listed in the Nairobi Securities exchange located in Nairobi. The data required for this study was from the year 2013- 2017. This period enabled the study to get sufficient information for comparison purposes. The population of the study was from all the non-financial firms listed in the Nairobi securities exchange. According to records from the Nairobi Securities Exchange, non-financial firms are 39. The study used secondary panel data contained in the annual reports and financial statements of listed non-financial companies from the Nairobi Securities Exchange Hand Book 2012-2016. The study found that long term investments had a positive and significant influence on financial performance of the listed non-financial firms at Nairobi Securities Exchange. Firm size was also found to have a significant moderating effect on the relationship between long-term investments and financial performance of listed non-financial firms. The study recommended that the management of non-financial firms listed at the NSE should focus on investing in long-term apertures through which they reap more financing sources to enhance their performance.

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