The effect of finance shared service on financial performance of manufacturing firms listed at Nairobi security exchange

Abstract

Finance Shared services (FSS) entered the corporate environment in the early 1990’s as large decentralized firms sought to combine basic transactional processes such as payroll, purchasing and accounts payable, and sell back those services at cost to the individual business units. As companies extend their presence across borders, it becomes increasingly uneconomical to maintain a duplicate finance and accounting infrastructure within each country ofoperation. FSS was therefore created to gain advantage in cost savings, standardization of process and to increase efficiency.The study sought to establish the effect of finance shared service on financial performance of manufacturing firms listed at Nairobi securities exchange.The study adopted descriptive research design. Secondary Data was obtained from Nairobi Securities Exchange 2007-2013 published handbook. Chi square test was used to analyze association between three years mean of Return on Equity, Earnings per share, Market price per share and Return on Capital Employed for period prior to and after implementation of FSS. The study revealed that there was no association between finance shared service and the financial performance of manufacturing firms listed at the NSE. The study recommends that there is need for management to understand and monitor the Costs of operations to ensure that controllable costs are brought minimized with the implementation of FSS since its reduces duplication of key processes that were being done in various branches