Effects of Working Capital Management on Performance of Non-Financial Companies Listed In NSE, Kenya

Abstract

The purpose of this study was to investigate the effect of working capital management on the performance of non-financial companies listed in the Nairobi Securities Exchange (NSE), Kenya. The study employed an explanatory non-experimental research design. A census of 42 non-financial companies listed in the Nairobi Securities Exchange, Kenya was taken. The study used secondary panel data contained in the annual reports and financial statements of listed non-financial companies. The data were extracted from the Nairobi Securities Exchange hand books for the period 2006-2012.The study applied panel data models (random effects). Feasible Generalised Least Square (FGLS) regression results revealed that an aggressive financing policy had a significant positive effect on return on assets and return on equity while a conservative investing policy was found to affect performance positively. The study recommended that managers of listed non-financial companies should adopt an aggressive financing policy and a conservative investing policy should be employed to enhance the performance of non-financial companies listed in the NSE, Kenya.

Key words: working capital management, performance, non-financial companies