Capital Structure, Board Gender Diversity and Financial Performance of Listed Companies at Nairobi Securities Exchange in Kenya
DOI:
https://doi.org/10.53819/81018102t7024Abstract
This research examined how board gender diversity influences the relationship between capital structure and financial performance of companies listed on the Nairobi Securities Exchange (NSE) in Kenya. The study aimed to address the following research inquiries: The link between capital structure and financial performance of listed firms on the NSE in Kenya is being inquired. Does the presence of a diverse gender composition on a company's board of directors influence the link between debt and equity funding and the company's financial performance? In order to do this, the study was based on the conventional theory of capital structure and used an explanatory research method. The research focused on a population of 65 publicly traded companies on the Nairobi Securities Exchange (NSE) in Kenya from 2018 to 2023. However, the sample size consisted of only 32 companies, resulting in a total of 192 observations. Document analyses were used to gather secondary panel data, which were then submitted to statistical analysis techniques such as Pearson's correlation and descriptive analytic measures such as mean and standard deviation. Finally, the study's hypotheses were examined by hierarchical regression analysis. The results suggest that debt financing, equity financing, and capital structure have a substantial and beneficial impact on financial performance. The presence of women on the board, known as board gender diversity, serves as a beneficial mediator between debt financing, equity financing, capital structure, and financial performance. It is therefore imperative that firms regularly try to keep check on the amount of money borrowed and the efforts should be made to ensure that companies do not go overboard in their borrowing and this is by ensuring they balance their sources of financing between debt and equity. Further, firms should afford more importance to equity financing since the study demonstrates that equity financing has always a positive association with the financial performance of firms. Also, it is important to strive to have high capital structures and ensure that there is a proper. mods separation of the two major sources of financing which is debt and equity. Finally, research has demonstrated that a number of aspects related to gender diversity on boards have a positive effect on firms’ financial performance, and therefore this area of corporate governance should be a priority.
Keywords: Board gender diversity, Capital structure, financial performance, and Nairobi Securities Exchange (NSE).
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