ANTECEDENTS OF FINANCIAL DISTRESS AMONG AGRICULTURAL FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE
Abstract
The purpose of this study was to determine the effect of firm specific determinants on financial distress evidence of Agricultural firms listed at the Nairobi Securities Exchange. The specific objectives were: to establish the effect of Firm size on financial distress of Agricultural firms listed at the Nairobi Securities Exchange, to determine the effect of Liquidity on financial distress of Agricultural firms listed at the Nairobi Securities Exchange. The study adopted a descriptive research design. The target population in the study consisted of the seven Agricultural entities quoted at the Nairobi Securities Exchange, Kenya as at December 2020. The study relied on secondary data to achieve the research objectives. The researcher visited the NSE online database for the years 2016-2020. The researcher then identified the agricultural firms listed and collect the data on firm size, liquidity for the years 2016-2020. The data was collected using a data collection schedule. After the data was collected, it was keyed into STATA software for analysis. The statistics generated were descriptive statistics and inferential statistics. The specific descriptive statistics included mean and standard deviations while the inferential statistics included a multiple linear regression model. The panel regression model was used to determine the relationship between the independent variables and the dependent variable which were explained in the model. The study found that firm size has negative significant influence on financial distress of agricultural firms listed at the Nairobi Securities Exchange in Kenya. Also, liquidity was found to have positive significant influence on financial distress of agricultural firms listed at the Nairobi Securities Exchange in Kenya. Given these findings, it is recommended that Agricultural firms listed on the NSE in Kenya focus on maintaining a manageable size to reduce their likelihood of financial distress. One possible way to achieve this is through a combination of organic growth strategies, such as increasing sales and expanding their product lines, and inorganic growth strategies, such as mergers and acquisitions. Also, maintaining adequate levels of liquidity to reduce their likelihood of financial distress is recommended. This can be achieved by effectively managing their current assets, such as cash and accounts receivable, and their current liabilities, such as accounts payable and short-term debt. [1]
[1] Thinwa, B., & Matanda, J., (2023). Antecedents Of Financial Distress Among Agricultural Firms Listed At The Nairobi Securities Exchange. International Journal of Social Science Management and Entrepreneurship, 7(2023), 368-380
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