Abstract: The general objective of this study was to establish the effect of financing determinants on capital structure for manufacturing and value-added firms in Nairobi City County. The specific objectives were; to analyze the effect of profitability on capital structure for manufacturing and value-added firms, to identify how levels of liquidity of a firm determines capital structure, to investigate how corporate taxes contribute to capital structure for manufacturing and value-added firms and to establish how competitive parity among manufacturing and value-added companies influence capital structure. The study reviewed theories that are relevant to the study. These theories included Capital irrelevancy theory, pecking order theory, Modigliani and Miller (1958) without Corporate Taxes, Modigliani and Miller with Corporate Taxes (1963) and competitive advantage theory. The research design, the research population, sample and sampling, data collection methods, and the data presentation and analysis will be elaborated in this study. The study used descriptive research design and inferential research design. The study’s target population was 256 manufacturing and value-addition firms in Nairobi from which a sample of 112 was used. Primary data used which was collected through self-administered questionnaires. Data analysis was done through Statistical Package for Social Science (SPSS) Version 25. Descriptive statistics included bar graphs, pie charts, means, standard deviations and percentages. Inferential statistics included Pearson Correlation and regression analysis. The study revealed that profitability had a positive significant effect on capital structure of manufacturing and value-addition firms in Nairobi County (β=0.462, p=0.000). Liquidity had a positive significant effect on capital structure of manufacturing and value-addition firms in Nairobi County (β=0.317, p=0.000). Competitive parity had a zero insignificant effect on capital structure of manufacturing and value-addition firms in Nairobi County (β=0.050, p=0.401). Corporate taxes registered a positive significant relationship with capital structure of manufacturing and value-addition firms in Nairobi County (β=0.513. p=0.000). The overall regression analysis revealed that financing determinants have a statistically significant effect on capital structure of manufacturing and value-addition firms in Nairobi County (R-square= 0.644, p=0.000). The study recommends for an increase in the scope for future studies to cover the Kenyan manufacturing and value-addition sector as a whole.
Keywords: Profitability, Liquidity, Valued-Added, Corporate Taxes, Capital Structure.
Title: Effect of Financing Determinants on Capital Structure for Manufacturing and Value-Added Firms in Nairobi City County
Author: Duke Ooko Mose, Dr. Jane Queen Omwenga, Dr. Charles Weda
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
Vol. 10, Issue 4, October 2022 - December 2022
Page No: 211-236
Research Publish Journals
Website: www.researchpublish.com
Published Date: 15-October-2022
