Determinants of Capital Structure of Cement Manufacturing Firms in Kenya

Abstract

The objective of this study was to establish the determinants of capital structure among firms in the cement manufacturing firms in Kenya. A descriptive study was used, the study population was the all the six (6) cement manufacturing firms in Kenya. Data was collected from secondary sources only. This was from the annual reports which were obtained from the NSE for the listed firms and company head offices for the unlisted firms. The data was analysed using a multiple regression model. The dependent variable was leverage while independent variables were profitability, firm size, asset tangibility, firm growth, liquidity and non-debt tax shield. The study established that all variables were predictors of leverage. All the variables had a positive correlation except profitability which had a negative correlation. The study recommended that finance managers of the cement firms come up with financial policies to ensure optimum mix of debt and equity to minimize the negative effect on profitability. The study also recommended that future studies be undertaken in other sectors to verify the finding