Influence of Financial Distress on Financial Risk Hedging Practices of Listed Non-Finance Firms in Kenya
DOI:
https://doi.org/10.17613/v1xe-m433Keywords:
Financial Distress, financial Risk hedging, liquidity level, Leverage, ProfitabilityAbstract
The study sought to establish the influence of financial distress on the hedging of financial risks by non-finance listed at the Nairobi Securities Exchange, Kenya. The study adopted a descriptive research design to examine the influence of financial distress on financial risk hedging practices among non-finance firms listed at NSE in Kenya. The population of interest comprised of the 39 non-finance firms listed at the NSE, Kenya. Given that the population size is smaller, the study did not carry out sampling and a census of the target population was adopted. The study was undertaken as a census of the 39 non-financial firms listed at the NSE. The researcher collected secondary data between 2016 and 2019 from annual reports of the non-finance firms listed at the NSE. The data collected was examined for completeness before analysis commenced. The data was entered in Excel spreadsheets and exported to SPSS. The data was analyzed using descriptive statistics, correlation analysis, and multiple regression analysis with the aid of Excel 2016. Inferential statistics included bivariate Pearson correlation and multiple regressions. The findings showed that liquidity level has a negative and significant effect on firm financial risk hedging decisions. Leverage had a negative and insignificant contribution to the prediction of financial risk hedging decisions of non-financial firms listed at the NSE. Finally, profitability had a negative and significant effect on the financial risk-hedging decisions of non-financial firms listed at the NSE. From the findings and conclusion, there is a need for an organization-wide policy on hedging and derivative use to act as an operation manual for the managers and firms' agents.
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Copyright (c) 2023 Samira Hamza , Miski Alinoor , Warda Abdullahi Abdi , Alex Nyabuti, Prof. Kennedy Okiro (Author)
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