Abstract: This paper contributes to the capital structure literature by investigating the effect of capital structure on growth of agricultural firms in Kenya listed on NSE, using annual data for the period 2012-2017. An empirical model to analyze the effects was specified and estimated using both fixed and random effects estimation techniques. The study used a sample of all the 7 agricultural companies listed on the NSE. The study was anchored on theoretical framework. It relied on secondary data. Regression and correlation analysis model was used to investigate relationship of capital structure on growth. The estimation results provide evidence capital structure has an effect on growth of agricultural firms listed on the NSE. Specifically, the results reveal a positive relationship between profitability and current liabilities to capital employed and a positive relationship between liquidity and size, earnings per share and sales growth. We also established while a negative link is evident between liquidity, the size of the firm and short-term debt. The evidence adduced is important for forming credit markets policies for agricultural firms both at the macro and the micro level.
Keywords: Nairobi Securities Exchange, Long term debt to Capital Employed, Short term debt to Capital Employed.
Title: EFFECT OF CAPITAL STRUCTURE ON GROWTH OF AGRICULTURAL FIRMS LISTED IN NSE KENYA
Author: George Shibanda, Dr. Julius Bichaga Miroga
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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