Relationship Between Asset Tangibility and Financial Leverage Among Commercial and Services Firms Listed at NSE, Kenya

Abstract

Leverage has remained a challenge especially among commercial and services firms listed at NSE like Kenya Airways. This has contributed to the financial performance challenges that majority of these firms like KQ are facing. Despite persistence of this challenge, little attention has been registered aimed at solving the same. Thus study sought to establish the effect of asset tangibility and financial leverage with profitability an firm size as control variables. Descriptive survey research design was adopted targeting 11 NSE listed entities and census was adopted. Auxiliary information on the time frame 2018-2022 was obtained. The analysis of the gathered information was supported by SPSS version 25 and presented through tables. It was apparent that profitability had the largest positive and significant effect on financial leverage then AT although its effect was negative then lastly firm size respectively. It was concluded that asset tangibility is a predictor of financial leverage when firm size and profitability are controlled. The study recommended that finance managers working with these firms should balance between fixed and non-fixed assets to achieve an optimal financial leverage position that would maximize the wealth of the owners