Effect of investment decision on the performance of firms Listed in the Nairobi securities exchange By

Abstract

There are numerous factors that affect the decision making of an investment plan. The main purpose of investing is to earn a return. If the fu ture returns from all available investments were known with certainty, an investor would certainly choose that investment which offers the highest rate of return over the required period of time but in practice the world is uncertain. The importance of Inv estment decisions on financial performance of firms cannot be over emphasized since many of the factors that contribute to business failure can be addressed using strategies and financial decisions that drive growth and the achievement of organizational ob jectives . Studies on the relationship between various financing decisions and performance have however produced mixed results. It is against this background that this study was carried o ut. The main objective of the study was t o establish the Effect of Inv estment Decision on the performance of firms listed in the Nairobi Securities Exchange . The study employ ed a descriptive research design. T he target population of the study as at 31 st December 2013 was all the 61companies listed at the Nairobi Securities E xchange, under the main segment. The study a dopt ed a census approach because of the small number of non - financial companies in the NSE. Both descriptive and inferential statistics were used in data analysis. The study utilize d panel data which consist ed of time series and cross - sections. Results revealed good, significant and positive correlation s between ROA and all the predictor variables, that is., Investment Decision, Financial Leverage and Liquidity