MCOM Theses and Dissertations (2019)
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- ItemAnalysis of factors affecting adoption of agency banking among micro, small and medium sized enterprises in Nairobi County - a case study of Gikomba Market(Strathmore University, 2019) Mukhule, Joyce Emmah NabwireAgency banking as a comparatively new model in Kenya has attracted attention from researchers due of the contribution it has towards financial inclusion. Lack of adequate finances has been identified as one of the challenges faced by MSMEs. Agency banking as an innovation seeks to mitigate the aspect of financial inclusion by taking banking services, which include but are not limited to provision of finance close to the customer. However, it is not conclusive as to what factors influence adoption of agency banking among potential customers. This led to the need to analyse possible factors that would affect adoption of agency banking. The first objective set out to analyse how perception influences adoption of agency banking whereas the second objective looked at social influence as a factor affecting adoption of agency banking. The research was descriptive targeting micro, small and medium enterprises in Nairobi County with special focus on Gikomba Market. Stratified Random Sampling was used and a structured questionnaire applied in data collection. The research findings concluded that social influence and perceived usefulness had a positive and significant impact on adoption of agency banking. The study recommends that there is need to have public participation through informative sessions as well as aggressive advertising and revamping of the agency model as a whole.
- ItemThe Influence of human resource management practices on employee retention in public universities in Kenya(Strathmore University, 2019) Kabaru, Maria WamaithaThe purpose of this study was to analyze the influence of human resource management practices on employee retention in public universities in Kenya. The specific objectives included: to establish the level of employee retention in public universities in Kenya, to investigate the influence of training and development on employee retention in public universities in Kenya, to analyze the influence of compensation on employee retention in public universities in Kenya and to examine the influence of recruitment and selection on employee retention in public universities in Kenya. Data was collected by use of questionnaires from the target population of 31 registered public universities in Kenya. Descriptive statistics, correlation analysis and multiple correlation analysis were used to analyze the data. Results showed that recruitment and selection was the most widely adopted human resource management practice, followed by compensation and reward then training and development as evidenced by their overall mean scores. On the influence of each human resource management practice on employee retention, training and development was the only independent variable found to be significant to employee retention in public universities in Kenya. The study however had limitations, in that it was only limited to three human resource management practices. The results therefore are not generalizable to all the other human resource management practices. Further research should therefore be done in order to find out what influence other human resource management practices have on employee retention in public universities in Kenya and in other areas of the world.
- ItemDeterminants of financial distress in Kenyan Commercial Banks(Strathmore University, 2019) Ndungu, Roseanne WanjiruThe recent relapse of bank failures in Kenya has been a cause for concern especially after a period of several years of stability in the banking sector. Past studies have identified key determinants of financial distress but few studies have established the effect of spreads on financial distress. This study therefore sought to establish the determinants of financial distress in Kenyan commercial banks. Specifically, the study looked at the influence of leverage, overly aggressive activity, insider lending, ownership structure, bank size and financial soundness (capital adequacy, asset quality, management efficiency, earnings, liquidity and market risk) as bank specific factors. It also looked at economic growth, the central bank rate and interbank activity as macro-economic factors. The study adopted a post positivistic philosophy and a quantitative research design. The methodology employed was panel data. A multivariate regression model was used to test the hypotheses and link the variables. The study took on a census approach and all forty-three Kenyan commercial banks were taken as the population. Secondary data was extracted from the financial statements of all commercial banks and Central Bank of Kenya website for the period 2012-2018. The study found that leverage, overly aggressive activity, market risk and bank size negatively and significantly affected the level of financial distress. Earnings, liquidity and the spread on insider lending are found to positively and significantly affect financial distress. Private ownership was associated with higher degrees of financial distress. Lastly, macro-economic factors were found to be poor indicators of the level of financial distress explaining less than two percent of the variation in financial distress levels. The study recommends that financial ratio analysis be complemented with additional evaluations, with extra features such as competitive position, capital structure, and regulatory compliance among others being encompassed within the final evaluation.
- ItemAn Investigation into the presence of market timing in configuration of capital structures by companies listed at the NSE(Strathmore University, 2019) Kioko, Elizabeth NthenyaThe study sought to examine whether over or undervaluation of securities drove capital structure decisions with a focus on companies that offered corporate debt and rights issues for the period between 2006-2016. Main study objective aimed at establishing presence of market timing in security issuance by companies listed at the Nairobi Securities Exchange (NSE). The study was anchored on four theories; Market timing, trade-off, pecking order and the irrelevance theories. Market timing theory assumes that no optimal capital structure exists for firms and that over or undervaluation of securities and conditions existing in the financial markets are the driving forces in securities issuance decisions. Trade off theory explains how corporations are usually financed partly with debt and partly with equity and that firms determine the type and amount of financing to use by trading-off the costs and benefits of both debt and equity. The pecking order theory assumes presence of information asymmetry between managers and investors in a firm. Equity and debt market timing are enabled by presence of private information asymmetry and public information asymmetries respectively. The pecking order further addresses other aspects of capital structure including ranking of types of financing used by firms and determinants of capital structure; tangibility of assets and firm growth. The “irrelevance theory” contradicts market timing theory by assuming market efficiency and that firms cannot increase firm value by switching between debt and equity. It addresses capital structure determinants such as profitability, non-debt tax shield and liquidity. Study methodologies utilised by the study were; an event study methodology, unbalanced panel data regression analysis and descriptive statistics for both primary and secondary data. Findings from the study indicate that corporate debt and rights issuing firms underperformed similar size non-issuing companies in the 30-day event window.MBR which is a measure and proxy for market timing was found to statistically and significantly influence market and book leverage which are measures and proxies of capital structure. Finance managers were found to have similar views with regard to both equity and market timing. The study found out that managers of listed/ intending to be listed firms, look at the actions and success of securities issuance decisions taken by other listed/ intending to be listed companies in making their financing decisions in such a way that if for example corporate debt issue has been successful, managers would issue corporate debt resulting in a sort of clustering of the security issues. If security issuance choices taken by the listed companies were unsuccessful the finance managers would re-strategize to other ways of financing such as borrowing loans from commercial banks or use other alternatives such as retained earnings until market conditions becomes favourable. The study concludes that there is presence of market timing in security issuance by the listed firms at the NSE. Further, the study concludes that a relationship exists between market timing and capital structures of quoted companies at the NSE. Presence of market timing in securities issuance enables listed companies to minimise overall cost of capital, resulting in shareholder wealth maximization through increased profitability of the firm, which is the ultimate goal for any finance manager.
- ItemAn Event study on effects of Kenya’s varying application of Capital Gains Tax on stock market performance at Nairobi Securities Exchange(Strathmore University, 2019) Obadha, Lilian AkothWhether CGT has a positive or negative impact on liquidity and stock returns is a puzzle stock markets across the World are yet to answer. Secondly, whether to go long or short on different portfolios held by investors during events surrounding CGT is a crucial investment decision most investors struggle with. The purpose of this research therefore was to assess the stock market performance following the three most recent events surrounding CGT in Kenya (Proposal to reintroduce CGT through the Budget Speech on 12th June, 2014, Reintroduction of CGT on 1st January, 2015 and Suspension of CGT on securities listed at any exchange licensed by CMA on 11th September, 2015). Using daily stock prices, volumes traded and market index (NASI), the paper employed a 15 day event methodology to examine the reaction of stock returns to CGT before, during and after the events. Data analysis found correlation between stock returns and CGT. There were abnormal returns and cumulative abnormal returns after CGT which were insignificant. Volumes Traded was analysed using Mann – Whitney U test, the null hypothesis was rejected meaning that volumes traded was higher after CGT events. Authorised Trading Participants had varying opinions on the role of CGT on stock market performance, while almost half the respondents were in agreement that CGT affect investment decisions and hence stock returns. The majority are opined that CGT causes uncertainty, makes the market less competitive and 100% of the respondents want CGT totally abolished on gains from securities at NSE. Generally, CGT affects stock market performance though the effect is insignificant, priorities such as dividend yield, diversification, liquidity informs most investment decisions.
- ItemInvestment preferences over the individual lifecycle: a case of private universities in Kenya(Strathmore University, 2019) Karanja, Joyce NyaireraThis research sought to investigate the investment behavior of individuals over the lifecycle. It had three objectives; to investigate the investment preferences over the lifecycle, to investigate factors influencing the investor’s investment decision and to investigate investment assets per the investor life cycle. The research used both qualitative and quantitative methods through used of questionnaires and interviews to understand the investor’s behavior. The target population was the faculty, student and administrative staff of private universities. Data analysis was carried using chi tests, correlational and regression analysis and correlational analysis. The findings showed for ages below 25 years the main goals were education of self, build up savings and meet basic needs. The investment assets held by this group were saving accounts. In the age group between 25-40 years the main goals were planning for retirement, meet basic needs and build up savings. The financial assets held by this group were saving accounts, real estate and debt instruments. In the age between 41-60 years the main goals were planning for retirement, build up savings, meet basic needs and education of family. The investment holding included saving accounts, derivative and debt instruments. In the age above 61 years, the main goals were planning for retirement and current income generation. The asset holding was stocks and land. This showed that to some extent the asset allocation was consistent with the guidelines of the Lifecycle investing theory. The findings showed that older people held stocks than younger people and that planning for retirement cut across all the ages. The findings also showed that younger people invest more in saving accounts than older people. The major factors that influenced an investor’s decision were ease of access of the investment asset, risk factors associated with the investment and the amount of income available for investing. In addition, the main factors that the suppliers of investment assets considered were the investment goals of the individual and the amount of income available for investment.
- ItemThe role of table banking on the empowerment of women in Kenya(Strathmore University, 2019) Sang, Amos KibetWomen entrepreneurship in the society is critical towards the economic development. However, women still encounter a lot of challenges in their quest to start or expand their businesses through acquisition of credit from formal financial institutions. As a result, most women have resorted to table banking groups as they are able to access affordable credit and other services that are crucial for the sustenance of their businesses. On that basis this study sought to determine the role of table banking on the empowerment of women in Kenya with specific focus on Nairobi, Uasin Gishu and Nandi. The researcher identified four constructs that can be used to conceptualize the role of table banking. These are table banking financing, membership power, organizational learning and networking power. These constructs were examined to understand the extent to which they affected empowerment of women. The study utilized three theories namely: social capital theory, social cognitive theory and empowerment theory. Social capital theory was the major theory that informed the study. This is because it is central to the core functions of community coalitions which involve building and creating collaborative and community capacity. It asserts that community coalitions empower their member organizations to collaborate effectively and their communities to build the social capital necessary to address emerging issues. Data was collected by use of questionnaires with the target population of 400 members of SHGs within Joyful Women Organization (JOYWO). The questionnaire incorporated a 5 point Likert scale. Descriptive statistics correlation analysis and multiple correlation analysis were used to analyze the data. Finding from the study revealed that there was a positive relationship between table banking and empowerment of women. Moreover, the findings revealed that all the constructs were significant in influencing empowerment of women. The study concluded that table banking was critical in the empowerment of women. The study recommends that the government should observe a culture that encourages adoption of table banking among other SHGs that do not utilize the table banking concept. The study limitations were that it only considered one table banking association, which is JOYWO. This research suggested that future research could extend to other table banking associations.
- ItemInfluence of growth strategies on performance of public universities in Kenya(Strathmore University, 2019) Sande, Nancy AumaThe study’s main objective was to investigate the influence of growth strategies on performance of public universities in Kenya. Ansoff’s growth strategies were explored. The study was grounded on Ansoff’s growth-vector matrix, the resource based view and the structure-conduct-performance framework. The study employed a cross sectional survey design involving the total population (census) of the 33 public universities in Kenya. The cross sectional survey design was used because of the comparative analysis across the universities. The cross sectional survey also helped to prove and/or disprove assumptions. The respondents were staff from marketing, planning and strategy, finance and administration departments of the universities. Data was collected through semi-structured research questionnaires, which were self-administered by the respondents with the assistance of the researcher. They were dropped and picked from the respective respondents. Data was evaluated through descriptive statistics and inferential statistics. The study findings were presented through frequency distribution tables. The study found that market penetration strategy has a positive influence on the performance of public universities. Product development has a positive influence on the performance of public universities. The study found that market development strategy has a positive influence on the performance of public universities. The study found that diversification strategy positively influenced the performance of public universities in Kenya. The study recommended that emphasis be put on the mainstream media advertising and social media to attract more students. The public universities should also ensure that their organization structure does not limit accessibility to its services and as a result, negatively influence customer satisfaction. Public universities should establish academic exchange programs with international universities to boost positive word of mouth as only few public universities have established exchange programs. Public universities should also continue implementing diversification strategy by developing new and relevant courses based on the market needs. Further studies may focus on the influence of growth strategies on organizational performance of other sectors such as the manufacturing, agriculture, aviation and health sectors in Kenya. Future studies may focus on other balance scorecard performance measures such as internal processes perspective, organizational capacity/learning and growth perspective or financial perspective. Similar studies may be conducted focusing on private universities for comparability.
- ItemFactors influencing the type and occurrence of fraud in deposit taking SACCOs in Kenya(Strathmore University, 2019) Koskei, IreneStudies have established that a knowledge gap exists with regard to factors influencing fraud occurrence and the types of fraud in SACCOs in Kenya. The aim of the study was to establish the factors influencing the type and fraud occurrence in deposit taking SACCOs in Kenya. Semi-structured questionnaires were used to collect primary data from 176 licensed restricted and unrestricted SACCOs in Kenya. A response rate of 63% was achieved after 111 questionnaires were received. Descriptive statistics, factor analysis, independent T-Test and multiple linear regression were used for analysis. Factor analysis revealed that all factors (pressure, opportunity and rationalization) were significant and thus were retained for further analysis. The regression results indicated that opportunity and rationalization had a statistically significant influence on fraud occurrence, while pressure had no statistically significant influence on fraud occurrence. There was general consensus on perceptions of respondents of restricted and unrestricted licensed SACCOs in most of fraud influencing factors. These study also highlighted significant difference in perception among restricted and unrestricted SACCOs on specific factors related to pressure, opportunity and rationalization that were linked to fraud occurrence. It was also established that employee fraud, asset misappropriation and corruption were perceived to have a high prevalence rate, with a general consensus among all participants. The correlation analysis results revealed that all the fraud-related factors had a positive relationship with fraud occurrence though opportunity and rationalization exhibited a stronger positive significant relationship when compared to pressure. The major limitation of the study was the dependence on the fraud triangle theory in determining fraud influencing factors and the exclusive use of questionnaires to collect data. This study was also limited in geographical coverage, time and industry. It is recommended that future studies could employ secondary data and use alternative theories to determine fraud influencing factors such as the cultural transmission theory and the anomie theory.
- ItemAssessment of employee productivity as a determinant of stock performance of Kenyan listed companies offering Employee Share Ownership Plans(Strathmore University, 2019) Kiura, Kenneth KinyuaThe study sought to assess whether Employee Productivity is a determinant of stock performance of Kenyan listed companies offering employee share ownership plans. The premise of the study is that, to be economically viable, an ESOP should be able to, through enhanced employee involvement and satisfaction and morale boosting to improve productivity. This should in turn lead to improved firm performance and thus benefitting both shareholders and employee owners by increasing their holdings value. This study used stock performance to avoid results that could be occasioned by manipulation of financial data. It employed a mixed research design that included both descriptive and quantitative research designs and purposive sampling was used to pick nine listed companies with approved ESOPs and another nine companies without ESOPs, which acted as the control sample. Secondary data was obtained from the financial reports of the firms for the study period as well as the stock market and was used in running the regression model. The key variable tested was employee productivity while the moderating variable was the presence or absence of ESOPs and several controlling variables were added to the model to improve its predictability. A t-test was used to check whether there is a significant difference in stock performance between companies with ESOPs and those without ESOPs listed at the NSE. The results showed that there is no significant difference between the stock performance of companies offering ESOPS and those not offering ESOPs listed at the NSE. Panel data was used to examine the effect of employee productivity in the presence of moderating variable (ESOP) on stock performance of companies offering ESOPs at the NSE. To begin with, presence or absence of ESOP was added as a moderating variable to see if Employee Productivity in the midst of ESOP was a significant determinant of Stock performance of companies listed in the NSE. Secondly, to further investigate the effect of employee productivity on stock performance, control variables were added to the model to see how all the variables interact together to explain stock performance of listed companies with ESOPS at the NSE. A pooled OLS was adopted and a stepwise regression carried out to check the significance of the key variable alone and in the presence of the moderating variable and control variables. At 5% significance, the only significant variable was found to be Ln Profits. Although this was the only variable found to be statistically significant, the overall model was found not to be significant in that the key study variable in the model, Employee Productivity and the moderating variable, ESOP, were not significant Primary data was collected using questionnaires both for the management and the employees to supplement the results from the secondary data regression analysis. To check whether management satisfaction with employee productivity is stimulated by the adoption of ESOPs, a t-test was used to check the mean difference and from the results, it appears that the means of the management satisfaction between firms with ESOPs and those without ESOPs listed at the NSE are not statistically significantly different. The study also sought to find out whether employee satisfaction is stimulated by adoption of ESOPs and a t-test was used to check the mean difference and from the results, it appears that the means of the employee satisfaction between firms with ESOPs and those without ESOPs listed at the NSE are statistically significantly different. This now elucidates that although the questionnaire findings had both shown that employees were generally satisfied both in companies with and without ESOPs, the employees in firms with ESOP seem to enjoy significantly more satisfaction.
- ItemInfluence of relationship marketing on customer loyalty in the telecommunication industry in Dar es salaam, Tanzania(Strathmore University, 2019) Wende, Robert MhidzeThe telecommunication industry in Tanzania is fast growing and has revolutionized the way people communicate, network or transact. This growth has led to a stiff competition within the industry and very low switching costs for the customers. In order to survive, these companies need to strategies on how best to retain their customers. The main objective of this MCOM study was to analyze the association between relationship marketing and customer loyalty in the telecommunication industry in Dar es salaam, Tanzania. The study adopted a descriptive survey design and primary data was collected using semi structured questionnaires. A sample size of 400 was derived comprising mobile subscribers from Vodacom, Tigo and Airtel living in Dar es Salaam. The results of the study established that there is a significant positive influence between relationship marketing and customer loyalty. Limitations to this study included language barrier of majority of the respondents making the study take longer than expected and budget constraints which resulted to the coverage of only one region which is Dar es Salaam. The study has made contribution to theory, policy and practice in relation to RM and customer loyalty, highlighting challenges and opportunities on how entrepreneurial leadership can leverage on these two variables to transform this technology sector. Further research may focus on studying different regions, other industries, use different methodologies, and even diversify on the relationship marketing variables.
- ItemInfluence of Total Quality Management practices on performance of hotels; case of star rated hotels in greater Nairobi region(Strathmore University, 2019) Mwaura, Bernard Ndung'uHospitality is one of the most vibrant industries in Kenya that has positively contributed to the economy through increased tourism earnings, creating employment and providing foreign exchange. The industry has experienced high competition over the years because of increased globalization, enhanced security and infrastructural developments. International hotel brands such as Moven Pick, Radisson blue, Kempinski among others are setting up their operations in the Country intensifying the competition further. In order to survive in this competitive environment, hotel and hospitality organizations are adopting quality management practices such Total Quality Management (TQM), Lean Operations among others to enable them to meet the dynamic customer demands and gain a competitive edge in the market. The purpose of this study was to determine the influence of TQM practices on performance of hotels. Specifically the research objectives included: To determine the influence of customer focus on performance of Star graded hotels in Greater Nairobi Region, To determine the effect of continuous improvement on performance of Star rated hotels in Greater Nairobi Region and to establish the influence of product and service design on performance of Star graded hotels in Greater Nairobi Region. The study was anchored on Deming Prize Theory, Juran’s TQM Model and the European Foundation for Quality Management theoretical models. Questionnaires were used to gather data from the target population of 44 Star rated hotels operating in Greater Nairobi Region. Descriptive statistics, correlation analysis and regression analysis were used to analyze the data. On influence of each TQM practice on performance of star rated hotels, customer focus and continuous improvement had a significant moderate relationship while Product and Service design had a significant strong positive relationship. Additionally, the regression analysis results revealed that continuous improvement and product & service design had a positive significant influence while customer focus had a positive insignificant influence on the performance of Star rated hotels in Greater Nairobi Region. The study however had limitations, in that it was cross sectional and therefore was not expected to capture TQM practices and performance changes that come with the passage of time since these variables are not static.
- ItemDeterminants of quality of assurance on sustainability reports in Sub-Saharan Africa: case of listed companies in Kenya, Nigeria, and Botswana(Strathmore University, 2019) Gatakaa, Christine NjeriIn recent times, it is evident that consumer and investor needs are constantly evolving, so has the facts stakeholders consider essential for decision-making. Conventionally, financial data was essential in making decisions but presently, it is not adequate for company analysis and valuation thus, the rise in demand for non-financial (social and environmental) which is relevant in evaluation of risks and opportunities. The major drivers being investor pressure, regulation and stock exchange requirements. In response to this kind of pressure, companies seek assurance services for additional credibility and validity on the information included in their sustainability reports. Thus, this research wanted to ascertain the quality of assurance on SRs and to understand what the determinants of quality are. The study also sought the perspective of industry players on the barriers of quality assurance. Using a sample of 34 companies, 18 companies in Kenya, 9 in Nigeria, and 7 in Botswana for the period 2013 to 2017, the study findings indicate that the quality of assurance is relatively low in Sub-Saharan Africa. An evaluative framework was used to measure quality of assurance and Botswana ranked highest followed by Kenya and Nigeria. Industry sector and company profitability were the two significant variables determining the quality of assurance. From the primary data, independence of assurer, profession of assurer and the assurance engagement lead in determinants of quality of assurance on sustainability reporting. The overall findings indicate that there is a need for proper guidelines for sustainability reporting essentially improving on the quality of assurance as the assurance process can be comparable and take into consideration the material aspects in SR.
- ItemThe Effects of working capital management efficiency in listed companies on the Nairobi Securities Exchange(Strathmore University, 2019) Maina, Dominic GachiraEfficient working capital management is a pre-requisite for enhancement of shareholders’ value and has a direct correlation with the firm’s profitability and as a consequence, the shareholders’ wealth maximization objective. The purpose of this study was to assess the economic consequences of working capital management efficiency in listed companies on the Nairobi Securities Exchange. The specific objectives were; to establish the influence of working capital management efficiency on a firm's future financial performance, to examine the contribution of working capital management efficiency of market performance and to analyze the managerial perspectives on the economic consequences of working capital management. Data was collected using both primary data source (questionnaires) and secondary data sources (annual reports). The data was analyzed using descriptive statistics and OLS regression analysis. The findings showed that inventory conversion period and account payable were significant in explaining changes in profitability. However, the cash conversion cycle and account receivables days were insignificant in explaining changes in profitability. The findings showed that account receivable days, inventory conversion period, account payable and cash conversion cycle were all significant in explaining the firm’s cash flow. The findings also showed account receivable days, inventory conversion period, and cash conversion cycle were all significant in explaining the firm market value. However, account payable days was insignificant in explaining firm’s market value. In the stock liquidity model, the findings showed account receivable days, inventory conversion period, and cash conversion cycle were significant in explaining the stock liquidity. However, account payable days was insignificant in explaining firm’s stock liquidity. The study, however, had several limitations. Annual reports for some the companies were not readily available. Managers from some companies were reluctant to fill up the questionnaires.
- ItemAssessment of factors affecting residential real estate prices in Nairobi County(Strathmore University, 2019) Ungayi, Hellen MusumbaThe study analyzes the effect of selected economic factors on real estate market in Kenya. House prices in Kenya have continued to rise over the past years. The study employed both cross sectional and time series data analysis to establish the relationship between growth in house prices in real estate and selected economic variables. Physical attributes of the property, locational factors and proximity to social amenities are fundamental in the determination of house prices. A factor analysis on cross sectional data showed that number of rooms, number of bathrooms, backup generator, swimming pool, balcony, parking garage and lift (micro variables) had significant effect on house prices at 5% level of significance. This is important for real estate developers when designing and building houses to capture home owners’ preferences that can add value and catalyze the residential real estate sector. Macro analysis of time series data using Vector Error Correction Model (VECM) revealed that on one hand inflation rate, Hass price index, investments in real estate and GDP while forex and diaspora remittances on the hand have asymmetric long run effects on growth in house prices on average, ceteris paribus. This implies that economic growth and conducive investment environment in the country stimulates developments in real estate which in turns leads to a steady supply of housing units at affordable prices for potential home owners. Lack of centralized housing data posed a challenge in collecting and collating time series data was one of the limitations faced by the researcher where it necessitated the researchers own calculation. This research will be of value as it gives insights on what matters most to different income groups as opposed to generalized findings.
- ItemOverhead allocation model for universities - a case for Strathmore University in Kenya(Strathmore University, 2019) Ndoloka, Vincent MuteiAn organization’s costing and overhead apportionment system is a system that helps the management with the strategy planning and the system also plays an important role in providing accurate cost information about the products and customers (Elias & Mehrotra, 2018). The pricing of a service or product should consider both the direct and indirect costs incurred. The allocation of indirect costs can be a complex process and if it is properly done, it will ensure fair costing and pricing of products and services while at the same time helping organizations’ management identify areas of inefficiency in order to take corrective action. According to El-Gammal et al (2016), most of the service sector organizations including education institutions are still using the traditional accounting system which allocates the company’s overhead costs to the performed services based on a single cost driver. This paper examined the current overhead allocation model used by Strathmore University and provides for an improvement to the current model using Activity-Based Costing. The reason for the study anchoring on Activity based costing is the study by Elias & Mehrotra, (2018), who noted that the upsurge of researchers’ and practitioners’ attentions towards the implementation of Activity-based costing in organizations were as a result of Activity-based costing’s superiority over traditional costing methods and subsequently its significance in enhancing organizational performance. The specific objectives were to determine challenges with the current overhead absorption model that Strathmore University uses, to identify and explore appropriate data in Strathmore University that may be used for overhead allocation and to develop a data driven overhead allocation model for Strathmore University. The study adopted a one case study methodology. The study found that management of Strathmore University were not happy with its current overhead allocation model. The study also manage found appropriate data in Strathmore University that could use for overhead allocation. An overhead allocation model was developed for library and admissions departments of Strathmore University based on the Activity-based model. The study concluded that the current overhead allocation model developed by Strathmore was overcharging some departments and undercharging others. This study was limited to Strathmore University and in particular its library and admissions departments. Activity-based Costing model was an overall improvement over the existing overhead allocation model. The model developed was on a departmental level. However, as proposed by Naidoo (2011), there is need for further analysis and tracing of activities to the course/product level.
- ItemThe Influence of dynamic capabilities on firm performance of listed manufacturing firms in Kenya(Strathmore University, 2019) Mutsembi, Eve NyashaManufacturing firms worldwide are faced with high competition which causes them to explore new ways of re-configuring their resources so as to gain superior firm performance. Existing studies have addressed the interaction between dynamic capabilities and firm performance, especially in the high tech sectors, with mixed findings. The dynamic capabilities view s an approach which helps to study whether firms can influence their firm performance by integrating, building and re-configuring their resources and competences. The aim of this study was to explore the relationship between dynamic capabilities and firm performance in the context of the Kenyan Manufacturing sector. The objectives of this study were to establish the influence of sensing capabilities on firm performance in the Kenyan listed manufacturing firms, to determine the influence of seizing capabilities on firm performance in the Kenyan listed manufacturing firms and to examine the influence of reconfiguration capabilities on firm performance in the Kenyan listed manufacturing firms. The study adopted a descriptive cross-sectional research design. A census survey was used with the study population comprising all the 27 listed manufacturing firms classified and listed by the Nairobi Securities Exchange as at December 2018. Primary data was collected from 3 respondents per firm using a structured questionnaire. A Likest scale was used to capture the perception of the managers on the influence of dynamic capabilities on firm performance. A content validity test was used to ensure that the questionnaire included an adequate and representative set of terms that tapped the concept. Data was analyzed using SPSS for descriptive and inferential statistics. The finding suggested that a positive relationship exists between sensing capability and firm performance; and seizing capability and firm performance. Reconfiguration capability was found to reduce the firm performance in the short term, due to the associated costs of asset realignment and business model redesign and restructuring.
- ItemThe Effect of social, cultural and economic capital on financial performance of Kenyan commercial banks(Strathmore University, 2019) Wachira, Solomon MwihungiThe importance of banks in any economy cannot be underestimated as they act as the intermediaries between lenders and borrowers to ensure cash flows within the economy. It is therefore important for bank regulators worldwide to ensure that bank financial performance is positive so as to avoid bank runs that may cause systemic bank failures that may in turn lead to recessions or depressions. The Basel Accords were introduced in the early 1980s to ensure positive bank condition that would in turn translate to positive financial performance. However, even with the revision in 1991 and later in 1999 for Basel II, there have still been bank failures. The most recent widespread failures led to the global recession of 2008 which was occasioned by failures of banks that were classified as financially sound and whose financial performance was stable, for example, Lehmann Brothers in the United States of America. In response to the failure of “sound” banks, the Basel Committee revised their capital requirements in an attempt to ensure better risk regulation in banks. However, this measure only focused on financial capital while bank failures have been attributed to other factors other than the financial capital, for example, moral hazard by managers which leads to losses or poor governance which leads to huge non-performing loans. This observation from previous literature influenced this study through the introduction of social capital and cultural capital, which when combined with financial capital, form the Bourdieusian Theory. This theory explains that these three forms of capital influence organizations’ performance significantly and the relationship has been shown by previous studies. This study tested if social capital, cultural capital and financial capital have an effect on the financial performance of Kenyan commercial banks. This is done by using quantitative proxies identified by previous researchers and qualitative measures from the Integrated Reporting (IR) Framework, introduced by the International Integrated Reporting Council (IIRC). The quantitative proxies were used in the model to show the effect, if any, that social, cultural and financial capital had on financial performance. The framework introduced more dimensions of capital that influence companies namely; manufactured, intellectual, human, natural, and social and relationship in addition to the traditional financial capital. The paper established proxies to be used in the model for social, cultural and financial capital to compare to the financial performance. Qualitative measures were established to measure bank management’s perceptions on the importance of social and cultural capital. Data was collected from Kenyan banks that were in operation in 2016 and analyzed. The quantitative data collected showed that there existed a relationship between the three forms of capital, social, cultural and economic and the model used was significant. The perception of managers, measured using data collected using a questionnaire was also presented. It was found that most responses were moderate thus supporting the quantitative findings that social and cultural capital have an effect on bank performance and therefore regulators may consider incorporating them as measures affecting bank performance. The findings will build the pool of knowledge on Bourdieusian theory and its effect on the financial performance of banks in Kenya.
- ItemDetermining the factors impacting the cost of compliance with Know Your Customer requirements in commercial banks(Strathmore University, 2019) Dzanga, Caroline KavumbiKYC compliance is no longer a suggestion for best practice but has instead become mandatory with regards to compliance for commercial banks in Kenya under POCAMLA 2009. Having an effective KYC requirement is a challenge to many commercial banks as the KYC guideline issued by the CBK appeared to be applied inconsistently depending on factors specific to the various commercial banks. In this regard, it has been noticed that commercial banks give an atmosphere desirable to the flow of that cash. This has turned the financial system into the key area in which illegal money is first introduced within the financial system for the anti-money laundering initiative. The overall aim of this study was to assess the impact on commercial banks ' compliance costs of knowing your client's requirements. This study was based on the basic theories of deterrence theory and cost of service theory. The study will employ descriptive research design. Both secondary and primary data were used in the analysis. The study targeted all the 43 commercial banks in Kenya. The study period was 2011 to 2017. The sample size was 80 respondents who were selected using simple random sampling. The study found that KYC requirements have a positive and significant influence on cost of compliance in the Kenyan commercial banks. The implication of the results is that effort by the banks to comply with the KYC policy is likely to be accompanied with increased cost of compliance. These costs could be attributed to number of awareness campaigns that banks organize, number of staff trainings held annually, number of staff in charge of IT systems, number of monitoring staff and number of fines and penalties accrued to the banks. Further, the study established that size of the banks measured in terms of total assets does not moderate the relationship between KYC and cost of compliance. All the control variables except profitability were found to have a positive (asset quality and ownership) and negative (bank age) significant influence on cots of compliance. Based on the findings, the study recommended that banks should come up with cost effective customer awareness strategies to ensure that they cut down on costs, should develop effective training programs, which will lead to cost reduction, should be able to source for highly competent IT experts to be in charge of the systems and should find ways of reducing the number of monitoring staff as a way of cutting cost.
- ItemEstablishing target capital structure of commercial and services firms listed on Nairobi Securities Exchange(Strathmore University, 2019) Nasio, Alfayo StephenTarget capital structure is a concept that has not been fully embraced by a majority of firms listed on NSE. This has attracted the attention of most researchers and finance scholars because of the contribution it has on the growth prospects and financial capabilities of a firm. Most of the firms that have experienced financial difficulties have cited wrong capital structure decision making as one of the main causation factors. This prompted the need to carry out a research, concentrating on a sector that has been worse hit by financial difficulties, to try and establish whether these firms do have target capital structures and in an event they do, whether they are actually operating at their target capital structures. The study also sought to find out after how long these firms take to adjust back to their target leverage and what actually determines this target leverage. This was a descriptive study targeting commercial and services firms in Kenya. Total population sampling was applied in this study since the population to the study was small. A structured questionnaire and a data collection sheet were used to collect both primary and secondary data respectively. Descriptive statistics and a partial adjustment model were used for data analysis. Regarding the first objective, the study found out that commercial and services firms exhibit presence of target capital structures, however none of them operated at their target leverage levels. The study found out that it takes approximately 2 years and 8 months for these firms to adjust back to the target capital structure in an event of a deviation and lastly, the study found out that non debt tax shield, tangibility, liquidity, business risk, profitability and firm size exhibit a positive significant relationship with target leverage. These findings should be of interest to regulators, commercial and services firms, potential scholars in this area in understanding the concept of target leverage among firms listed on NSE
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