Financial Characteristics and Market Value Added for Non-Financial Firms Listed at the Nairobi Securities Exchange in Kenya

Abstract

This study intended at assessing why in the recent past, market value added for most firms in Kenya has been on a downward streak, and whether their financial characteristics manipulate their market value-added, or otherwise. The specific objectives included: to investigate the effect of firms’ total assets, investment strategies, effective tax rate, and assets utilization on firms’ market value-added. The research paper embraced a descriptive research design. The target population was 36 non-financial businesses listed at the Nairobi Securities Exchange. Panel regression analysis was used. The findings indicated that effective tax rates had a negative and considerable impression on the market value-added of non-financial corporations. Further, conclusions divulged that investment patterns had a constructive and foremost effect on the market value-added of non-financial firms. Though, the size of a firm and assets utilization had no significant influence on the market value-added of non-financial firms. The study concluded that effective tax rates and investment patterns are significant determinants of market value added on non-financial firms. The study advocated that the government should contemplate slashing the tax rates correlated to non-financial firms. The management of non-financial firms should develop apt investment models to guide and inform the way a firm makes key investment determinations.