Equity Investment and Financial Performance of Listed Investment Firms in Kenya
DOI:
https://doi.org/10.53819/81018102t2431Abstract
The maximization of an organization benefit is vital and remains the critical goal of any institution in business. Investment decision making in most corporate institutions is regarded as a financial underlying decision executed by top management in the financial sector which include financing decisions and dividends decisions. Making a decision on why to invest on various financial securities is a fundamental goal to the financial performance of an investment firms. Large organizations are faced with portfolio investment problem; this is because there are so many investment projects to be invested on. Nearly all the listed investment firms in Kenya have registered declining profitability in the last five years. The aim of the study was to assess how equity investment affected financial performance of listed investment firms in Kenya. Modern portfolio theory anchored this investigation and was supported by expected utility theory, liquidity preference theory and active portfolio management theory. Explanatory research design provided basis for this research. The study focused on all five listed investment firms in Kenya. The study employed census since investment firms in Kenya are few and can be studied in the entirety. Informed by the availability of already published information, this study obtained data from secondary sources where it covered a period from 2011 to 2021. Since the study targeted various firms in different periods then panel analysis was considered the most appropriate mode data analysis that was borrowed. This mode of analysis enabled the study to test the relationship of study variables as envisaged by the study goal. Finding of the study found out that equity investment positively and significantly affected profitability of listed investment firms in Kenya. Based on the results it can be concluded that equity portfolio investment is an essential predictor of financial performance. The study recommends the usage of the finding as benchmark by regulators in improving investment of portfolio selection in the capital market.
Keywords: Financial performance, equity investment, listed investment firms, Kenya
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