Abstract: The goal of this research was to ass’s factors that affect capital structure in non-listed firms in Thika town. The intention was to close the gap in empirical literature in respect to capital structure determinants in Kenya. In particular the main objectives were; evaluate whether, growth opportunities, profitability, tangibility and firm size affect the financial capital in any way. The study adopted descriptive survey research design. The target sample was 49 top managers in 218 non-listed companies in Thika town. These managers were served with questionnaires. Only 35 of the 49 questionnaires were recovered. This was a recovery rate of 71% which was a good data sample for further analysis. The data was analyzed through descriptive statistics and inferential statistics. Multiple regression analysis was employed to determine the effect of growth opportunities, profitability, and tangibility and firm size variables on the financial capital. The study found a negative relationship between firm size and capital structure, negative relationship between growth opportunity and capital structure, negative relationship between profitability and capital structure and positive relationship between tangibility and capital structure.The researcher concluded that in Thika town in Kenya profitability, tangibility, firm size and growth opportunities affected the capital structure of the non-listed firms. The study recommended that the managers and boards of directors are advised to make sure that they consider setting an optimal capital structure in their firms. They should further consider the size effect when making financing decisions. This findings supports the pecking order theory which postulate that firm must consider internal sources of finance followed by external debt and finally if financing become a real challenge issue equity as a last resort.
Keywords: capital structure, firm size, tangibility, profitability and growth opportunities.
Title: Determinants of Capital Structure of Private Firms in Thika Town
Author: Esther Muthoni Gicheche, Dr. Willy Muturi
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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