| dc.description.abstract | Operational efficiency has attracted much interest in corporate finance literature over several decades. However,
in the context of the agricultural sector, it has received little attention in developing economies such as Kenya.
Operational efficiency and performance of Agricultural firms listed at the Nairobi securities Exchange have been
fluctuating over the years. This is partly attributed to specific firm characteristics. The objective of this study was
to determine the relationship between firm characteristics and operational efficiency of agricultural firms listed at
Nairobi securities Exchange. The study was anchored on trade off theory, liquidity preference theory, agency
theory, miller and Orr’s cash management model. The target population was 7 agricultural companies listed at
Nairobi securities exchange. The study used audited financial statements’ secondary data collected from 2011 to
2020. Data was analysed using descriptive statistics, correlation analysis and panel data regression analysis with
the help of STATA version 13. The study found out that there was a significant negative relationship between
asset tangibility, firm size and operational efficiency of agricultural companies listed at Nairobi securities
exchange. Further, there is a significant positive relationship between cash reserves and operational efficiency of
agricultural firms listed at Nairobi securities exchange. This study recommends that management of agricultural
companies listed at Nairobi securities exchange should pay attention on asset tangibility, firm size and cash
reserves because they have a significant relationship with operational efficiency. Firms can utilize productive
assets as collateral for debt without incurring high borrowing costs. The firm size should be optimal because very
large firms are characterised by inefficiencies due to control weaknesses. Policy makers should incorporate factors
such as asset tangibility, firm size and cash reserves in their strategic plans. | en_US |
