Effect of Debt Leverage and Debt-Equity Leverage on Financial Performance of Commercial and Services Companies Listed at the Nairobi Securities Exchange, Kenya
Keywords:
Financial performance, debt leverage, equity leverage, debt-equity leverageAbstract
Financial performance is very critical for firms, management, and other stakeholders of all organizations. All stakeholders are very interested in performance and are concerned about it. Measuring a company's financial performance helps management in collecting information on how money is invested and how money flows inside and outside the company. The main aim of the investigation was to determine the effect of debt leverage and debt equity leverage and the financial performance of commercial and services companies listed at the Nairobi Securities Exchange, Kenya. The target population was Eleven (11) service and commercial firms listed with the NSE. Purposive sampling was used to sample 7 firms that have been consistently listed in NSE from 2017 to 2021. STATA, a statistical program that assisted in presenting descriptive and panel data models for analysis, was used to analyze the data. There was testing for diagnostic indicators such as normality, autocorrelation, multicollinearity, heteroscedasticity, and linearity. Tables and panel regression tables were used to display the results. Effective citations and participant permission, among other ethical issues, were followed. The research revealed that debt leverage had a sizeable impact on ROA. It was discovered that -debt-equity leverage had a considerable impression on the success of listed businesses and services. However, it was discovered that equity leverage did not meaningfully impact financial success. The policymakers at commercial and service firms should develop policies and regulations that can guide debt management among commercial and service firms. The policymakers at CMA need to develop suitable policies on debt.
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