| dc.description.abstract | The recent global recession and the covid pandemic which have turned into an economic
crisis have served to make financial flexibility even more important. Existing literature
suggests that listed firms in the Nairobi Securities Exchange (NSE), have not managed to
undertake the investment required of as compared to other countries. In this mind, the present
study aimed to examine the influence of financial flexibility on the firm value of listed non-financial corporations at the NSE in Kenya from the period 2011 to 2019. Specifically, this
study examined the influence of cash holdings; debt capacity; and financing cost restrictions
on firms’ value of listed non-financial companies quoted at the NSE. The study further
examined the moderating role played by firm size in the association between financial
flexibility and firm value of non-finance companies quoted at the NSE in Kenya. The study
was underpinned by the free cash flow theory, the trade-off theory and the pecking-order
theory. The study adopted a descriptive longitudinal research design and focussed on all the
37 non-financial listed at the NSE as of December 31, 2020. However, firms that were
financially distressed as of the time of data collection did not form part of the study. As a
result, only 31 firms with 272 firm-year observations formed part of the study. The study
utilized panel data that was analysed using panel multiple regression analysis and aided by
the STATA statistical package. To ensure the non-violation of statistical assumption and to
allow for remedial action when a violation occurred, diagnostic tests were carried out. Hausman specification test results favoured the use of the random-effects model. Results of
the study indicated that independently, debt capacity and financing cost restrictions were
found to have a positive and a statistically significant influence on firm value of listed non financial firms in Kenya. However, cash holding did not have a statistically significant
influence on firm value. Jointly, financial flexibility was found to have a statistically
significant association with firm value. Financial flexibility explained 65.11 per cent of the
variation in firm value and firm size was found to have a moderating effect on this
relationship. As this study focused on non-financial firms, it recommends that similar studies, but now industry-specific be undertaken. | en_US |
