Asset structure, leverage, and value of listed firms: Evidence from Kenya
Firm value shows the performance of a firm while reflecting the present value of the firm’s future cashflows, hence affecting investment decisions. Therefore, this paper explores the relationship between asset structure, leverage, and firm value of 51 listed companies between 2010 and 2019 using sec...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2023-02-01
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| Series: | Investment Management & Financial Innovations |
| Subjects: | |
| Online Access: | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/17741/IMFI_2023_01_Habakkuk.pdf |
| _version_ | 1797810825829810176 |
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| author | Barine Nkonge Habakkuk Kariuki Samuel Nduati Kariuki Peter Wang’ombe |
| author_facet | Barine Nkonge Habakkuk Kariuki Samuel Nduati Kariuki Peter Wang’ombe |
| author_sort | Barine Nkonge Habakkuk |
| collection | DOAJ |
| description | Firm value shows the performance of a firm while reflecting the present value of the firm’s future cashflows, hence affecting investment decisions. Therefore, this paper explores the relationship between asset structure, leverage, and firm value of 51 listed companies between 2010 and 2019 using secondary data collected from audited financial statements. The study applies panel data regression models and the causal-comparative research design. The quantitative data are analyzed using multiple regression. The result shows that plant, equipment, property, current, and financial assets influence the firm value positively. Nonetheless, the quotient of current to total assets was reported to yield the highest beta coefficient, implying that significant firm value creation is realized for every additional current asset held, weighed against the quotient of additional equipment, property, and plant to the value of total assets. Leverage had an insignificant influence on the value of firms, implying that no maximization of value is attainable in manufacturing firms through the astute use of borrowed funds. The study recommends that finance pundits consider firms’ asset structure and the use of borrowed funds when formulating financial and investment policies. The study enriches the scholarly world by developing a model for establishing the value of listed firms. |
| first_indexed | 2024-03-13T07:13:36Z |
| format | Article |
| id | doaj.art-14856be1e3194d09b0b785a733156562 |
| institution | Directory Open Access Journal |
| issn | 1810-4967 1812-9358 |
| language | English |
| last_indexed | 2024-03-13T07:13:36Z |
| publishDate | 2023-02-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Investment Management & Financial Innovations |
| spelling | doaj.art-14856be1e3194d09b0b785a7331565622023-06-05T10:44:16ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations1810-49671812-93582023-02-0120118419410.21511/imfi.20(1).2023.1617741Asset structure, leverage, and value of listed firms: Evidence from KenyaBarine Nkonge Habakkuk0https://orcid.org/0000-0002-6407-6456Kariuki Samuel Nduati1https://orcid.org/0000-0001-6104-2800Kariuki Peter Wang’ombe2https://orcid.org/0000-0002-3087-1136MBA in Finance, School of Business and Economics, University of EmbuDr, School of Business and Economics, University of EmbuDr, School of Business and Economics, University of EmbuFirm value shows the performance of a firm while reflecting the present value of the firm’s future cashflows, hence affecting investment decisions. Therefore, this paper explores the relationship between asset structure, leverage, and firm value of 51 listed companies between 2010 and 2019 using secondary data collected from audited financial statements. The study applies panel data regression models and the causal-comparative research design. The quantitative data are analyzed using multiple regression. The result shows that plant, equipment, property, current, and financial assets influence the firm value positively. Nonetheless, the quotient of current to total assets was reported to yield the highest beta coefficient, implying that significant firm value creation is realized for every additional current asset held, weighed against the quotient of additional equipment, property, and plant to the value of total assets. Leverage had an insignificant influence on the value of firms, implying that no maximization of value is attainable in manufacturing firms through the astute use of borrowed funds. The study recommends that finance pundits consider firms’ asset structure and the use of borrowed funds when formulating financial and investment policies. The study enriches the scholarly world by developing a model for establishing the value of listed firms.https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/17741/IMFI_2023_01_Habakkuk.pdfasset structurecorporate governancefirm valueleveragesecurities |
| spellingShingle | Barine Nkonge Habakkuk Kariuki Samuel Nduati Kariuki Peter Wang’ombe Asset structure, leverage, and value of listed firms: Evidence from Kenya Investment Management & Financial Innovations asset structure corporate governance firm value leverage securities |
| title | Asset structure, leverage, and value of listed firms: Evidence from Kenya |
| title_full | Asset structure, leverage, and value of listed firms: Evidence from Kenya |
| title_fullStr | Asset structure, leverage, and value of listed firms: Evidence from Kenya |
| title_full_unstemmed | Asset structure, leverage, and value of listed firms: Evidence from Kenya |
| title_short | Asset structure, leverage, and value of listed firms: Evidence from Kenya |
| title_sort | asset structure leverage and value of listed firms evidence from kenya |
| topic | asset structure corporate governance firm value leverage securities |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/17741/IMFI_2023_01_Habakkuk.pdf |
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