MCOM Theses and Dissertations (2014)

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    The Relationship between Corporate Social Responsibility (CSR) and profitability of listed companies in the Nairobi Securities Exchange (NSE)
    (Strathmore University, 2014) Olang'o Josephine Adhiambo
    This study explores the extent and components of corporate social responsibility disclosure by listed companies in the Nairobi Securities Exchange. The study also reveals that companies have been at the forefront of adopting voluntary corporate social responsibility disclosure in order to enhance firm performance and attract investors while guaranteeing the stake of existing stakeholders. To maximize on the benefits of corporate social responsibility disclosure and improve stability of the firm, shareholders, managers, policymakers and other stakeholders need to appreciate the gains made so far and understand what factors influence the same. A panel data set of listed companies' corporate social responsibility disclosure information was tabulated using an un-weighted corporate social responsibility disclosure index. The study applies the least squares regression technique in exploring the relationships between corporate social responsibility disclosure and financial performance as measured by return on equity. The study reveals that there has been a consistent growth in CSR disclosure practices by companies listed in the Nairobi Securities Exchange from a low average of 121 words in (2003) to a commendable average of 1,527 words in (2012). The quality of CSR disclosure also increased from a low average of 29% in (2003) to 89% in (2012). A similar trend was also observed in financial performance with a steady increase in profitability as measured by return on equity from a low average of -6% in (2003) to a commendable average of 21% in (20 11 ). The study further reveals that the following independent variables in the PROF model are positively related to PROF. These are; corporate social responsibility as measured by the number of words used in the annual reports to disclose CSR and corporate social responsibility as measured by the quality of disclosure with the components employees, environment, education, health, community involvement and sponsorship or donations. This result holds when panel data methodology is adopted because it combines time and cross-sectional or group data. However, when results are analysed individually as shown on Table 4.6 (page 61), we obtain mixed results where independent variables CSRQTTY and CSRQL TY give mixed results in their relationship with profitability as measured by return on equity (PROF). That there is a noted increase in corporate social responsibility disclosure and financial performance is an achievement to all stakeholders. The knowledge of the specific parameters where there is no disclosure forms a critical partt of what should now be the focus for improvement by the managers and regulators.
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    Calendar anomalies - Evidence from the Nairobi Securities Exchange
    (Strathmore University, 2014) Kiptanui, Peter Kipchirchir
    Calendar anomalies are a phenomenon that seem to suggest that financial securities such as stocks, bonds and even derivatives, experience patterns of returns that coincide with particular points in the week, month or year. Previous studies have suggested that these effects are unique to certain markets and even within those geographical markets, are specific to certain financial products. The reason that calendar effects are considered of particular interest to researchers is twofold: first, they disprove traditional theories that support the existence of efficient markets and second, they offer insight to those who wish to take advantage of arbitrage opportunities to make a profit. The goal of this research thesis was to check the Nairobi Securities Exchange for calendar anomalies. In the event that they exist, the paper is meant to proceed and describe the magnitude of these effects. Should there not have been any effects. This research thesis intended to provide evidence to support that position. This evidence would enable scholars, policy makers and investors aware of what market they are operating in with regard to calendar anomalies. The specific calendar anomalies tested were the day of the week effect and the month of the year effect. These effects were tested in the NSE 20 index and the individual stocks of the Nairobi securities exchange. The results find very slight and diminishing effects in the index. Higher returns were noted in January and Friday going on to Monday. In the individual stocks, Friday was noted as the day with the highest return. However, the anomaly in individual stocks is recorded at very low levels; are as such were not significant to alter a rational investor's decision.
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    Factors affecting financing of private telecommunications companies in Kenya: an exploratory study
    (Strathmore University, 2014) Malitt, Edmund
    The purpose of the study was to explore the factors affecting external financing of private telecommunications companies in Kenya. The study targeted privately owned telecommunication companies in Kenya and the funding constraints they face.The findings of the study indicate that telecommunication companies in Kenya to a large extent source for funds externally (95%), many early life companies (0 to 5 years) have not fully benefited from the external funding for both for Operating expenditure (Opex) and capital expenditures (Capex). The main factors influencing sources of funds were identified to be decision making, interest rates, and government policies, age of company, inflation and available sources of funds. Funding constraints included high interest rates, over-regulations, and slow pace of external funding procedures amongst many other challenges.Chi square and factor analysis was used to test relationship between identified variables and to test for reliability of the factors under study. Findings indicate that political instability is the most important determinant factor in funding. This must be strengthened to keep telecoms liquid in the long-run. The results also show that market regulation had the highest impact as a constraint.The study recommends the need to engage investors and venture capital firms to reap the benefits of untapped markets segments in the telecommunication sector in Kenya. The involvement of the government as a facilitator through the provision of policy and economic environment will continue to be more critical. A stable regulatory and economic environment as identified in this study is equally important to the sourcing of external funds.There is need for further studies to seek deeper knowledge on the priorities of telecommunications investors and the donor community and thus begin the process of creating a valuable relationship for both investor and recipient companies.
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    Relationship between environmental management strategies and profitability among Kenyan manufacturing firms
    (Strathmore University, 2014) Onyango, Jean N. Anyango
    Organizations formulate and implement varied forms of strategies to improve their performance. Environmental strategies are largely borne out of push by regulation unlike other strategies which are motivated by need to improve performance and profitability. Therefore the influence of environmental strategies on profitability presents a fertile ground for research. The general objective of the study was to find out the relationship between environmental strategies and profitability of manufacturing firms in Kenya. A descriptive study was conducted with a target population of 735 manufacturing firms who were members of KAM as at 2013. A sample size of 110 firms was selected from which primary data was collected using questionnaires. Data was analysed using SPSS through descriptive analysis and multiple OLS regression analysis. Results were presented using charts and tables for ease of interpretation. Study findings revealed that majority of the Kenyan manufacturing firm had adopted ISO certification to a great extent. However, environmental components such as training on EMS, redesigning of products, developing EMS policies, environmental auditing, documentation of environmental issues, implementation of EMS, investment in green technology, undertaking eco-friendly activities, production of green products, adopting renewable energy and recycling activities were adopted to a moderate extent. The study further established thatmost of the respondents indicated that adoption of environmental strategies increased firm revenues. Further, study results indicated that environmental strategies applied enhanced cost saving from safer workplace conditions, ensured cost savings from conservation of natural resources and cost reductions associated with reduced emissions. Study results further revealed that environmental management strategies had a positive relationship with profitability of firms. The study recommends that there is need for increased compliance on environmental regulations and adoption of environmental strategies so as to increase revenue for the firms, improve corporate image, increase efficiency in production by reducing wastage thus achieving ISO certification and gaining competitive advantage. The study also recommends that the government should give incentives to companies adopting the environmental management strategies and also provide more information through research and case studies, so as to guide the firms adopting these strategies. The companies also need to allocate more resources and employ services of environmental consultants to guide the firms in adopting and implementing the environmental management strategies.
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    The implication of Information Technology outsourcing on operational firm performance : a study on companies in Nairobi
    (Strathmore University, 2014) Namiinda, Anne
    The general purpose of the study was to investigate the implication of I.T. outsourcing on operational performance of companies in Nairobi. The study sought to find out whether there is a change in cost savings after I.T. outsourcing, change in efficiency of service provision and provision of up to date technology and determine the impact of outsourcing of information technology on the provision of up-to-date Technology. Two theories were applied in this research which is transactional cost theory and agency theory. The research targeted companies operating in Nairobi where questionnaires were sent out to the targeted population for collection of primary data while secondary data was collected from the financial statements. Data collected from questionnaires was coded and entered in SPSS software for analysis. The study found out from the analyzed data that there was indeed reduction of costs after I.T. outsourcing. From the questionnaires, the study found that most respondents were of the opinion that there was efficient provision of I.T. services and provision of up to date technology which was due to the economies of scale enjoyed by the vendor or service provider. The study also found that I.T. outsourcing is not as widespread in Kenya as in other parts of the world. Companies in Kenya should consider outsourcing I.T. as it reduces costs and enables them to focus on their core competences. This should however be done with caution and with inclusion of all stakeholders in I.T. as well as signing of service level agreements (S.L.A.s) with the vendors.