MCOM Theses and Dissertations (2010)

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Browsing MCOM Theses and Dissertations (2010) by Subject "Nairobi Stock Exchange"

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    Directors’ remuneration and firm performance in a study of Nairobi Stock Exchange listed companies
    (Strathmore University, 2010-12) Injeni, Geoffrey Ikavulu
    Under the agency theory, directors who act as agents of shareholders may benefit from the company by awarding themselves high remuneration. To resolve this problem, some authors have recommended corporate governance principles which include a requirement to pay directors based on firm performance. Examples of pay based on firm performance include bonuses and stock options. In Kenya, companies listed on the Nairobi Stock Exchange (NSE) are required to comply with the corporate governance principles issued by the Capital Markets Authority (CMA), which require directors’ remuneration to be based on firm performance. The purpose of the study was to find out first, whether there is a relationship between directors’ remuneration and firm performance for Nairobi Stock Exchange companies, and secondly, the components of executive pay together with the key factors that determine executive pay. A regression analysis involving 37 NSE listed companies covering the period between 2003 and 2008 showed the majority of the companies reported a weak positive relationship between executive remuneration and firm performance (when measured by Revenue Growth, Net Profit Margin, Return on Investment, Return on Equity and Earnings per Share), and a weak negative relationship between executive remuneration and stock market returns (measured by Share Price Growth). In addition, an analysis of 23 respondents from the 37 companies also found salaries, fees and other benefits to be the key components of executive pay. Majority (60%) of the respondents mainly consider experience and qualifications to be the key factors that determine executive pay. The study has confirmed the inconsistency of pay based performance in Kenya. The study has also highlighted the key determinants of directors’ remuneration for companies listed on the NSE. Further studies can be done to establish the challenges of implementing performance based pay in NSE companies. In addition, further research can be done on performance based pay for small and medium sized firms and in the public and private sectors.
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    The Relationship between working capital management and profitability for companies listed on the Nairobi Stock Exchange.
    (Strathmore University, 2010) Mathuva, David Mutua; Dr. Ellinami J. Minja
    This study examined the effect of working capital management (WCM) practices on company profitability. Using agency, transactions cost and trade-off theories, the study also sought to establish whether the hypothesized relationships between working capital practices and profitability can be defended from both financial and managerial perspectives. Data for this study were collected from the annual financial reports and questionnaires from 30 companies listed on the Nairobi Stock Exchange. The financial data covered a 16- year period (1993 to 2008). The variables of interest included various measures of working capital management, profitability and company characteristics. The financial data were analyzed using pooled ordinary least squares, fixed effects and two-stage least squares estimations. Five regression models were run incorporating each of the key independent variables in each model. Data collected from questionnaires were analyzed using frequency tables. Chi-square tests were also performed on the questionnaire data. Consistent with prior research, this study established that there existed an overall negative relationship between working capital management and profitability. Key findings from the study from both financial and questionnaire data analyses were: (1) a highly significant negative relationship exists between the time it takes companies to collect cash from their customers (accounts collection period) and profitability (p