Abstract: The selection of a financial structure is one of the most difficult tasks that commercial enterprises must complete. The choice of financial structure is crucial since it impacts the companies’ the company’s financial results. Since retained earnings may not be available or adequate, total debt is a major source of financing for many expanding businesses. On the other hand, if businesses choose poorly for debt financing, the result could be excessive capital costs and a decline in overall financial performance. This study aimed at investigating the effect of firm age and asset tangibility on total debt of firms listed on Nairobi Securities Exchange. Study was anchored on pecking order theory and trade off theory. The study utilized descriptive research design. The study used secondary data from annual accounting report of quoted firms on Nairobi securities exchange. Data analysis was performed in order to convert obtained data into a format that can be used for interpretation and conclusion. Because the study was based on panel data, the analysis was based on panel regression. Firm age had a negative and insignificant effect on total debt. Result showed a negative and significant relationship between asset tangibility and total debt. Due to the negative effect, firms especially new to the market should explore alternative options such as venture capital, equity financing carefully considering all possibilities.
Keywords: Asset Tangibility, Firm Age, Pecking Order Theory, Trade off Theory and Total Debt Theory.
Title: EFFECT OF FIRM AGE AND ASSET TANGIBILITY ON TOTAL DEBT OF FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA
Author: Oliver Mukweyi Pyoko
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
Vol. 11, Issue 2, October 2023 - March 2024
Page No: 379-384
Research Publish Journals
Website: www.researchpublish.com
Published Date: 19-March-2024
