Comparison of the effect of cash flow management on listed and non-listed insurance companies in Kenya

Abstract

The purpose of this study is to ascertain how cash flow management strategies impact the financial performance of Kenyan insurance businesses, both listed and unlisted. The study compares the efficacy of cash flow management initiatives across two categories of firms in an effort to fill in the gaps in the body of literature. The study focuses on the relationship between operating, investing, and financing cash flows and financial performance as indicated Return on Equity (ROE). The study uses secondary data that was gathered from 33 regulated insurance companies in Kenya between 2010 and 2023 and applies a descriptive research design. The results underline the differing effects of cash flow management strategies on listed versus non-listed companies' financial performance, highlighting the influence of market forces and regulatory oversight on listed businesses. The study concluded that operating cash flows had a positive and statistically effect on the financial performance of Kenyan insurance firms. The cash flow management activities from investing activities had a positive but insignificant effect on the financial performance. Financing activities cash flows had a negative but statistically insignificant effect on financial performance. Additionally, the comparison of the financial performance of the listed and unlisted firms concluded that there was no statistically significant difference between the means of the ROE, however there was a statistically significant difference between the means of net profit margin with the unlisted insurance firms outperforming the listed firms. This study offers investors, regulatory legislators, and managers of insurance companies insightful information about the strategic value of cash flow management in improving financial performance and stability