Government Ownership Structure and Financial Performance of Firms Listed at the Nairobi Securities Exchange, Kenya

Dorcas Stella Nyambura Kariuki (), Isaac Linus Ochieng’ (), Gordon Opuodho () and David Agong’ ()

International Journal of Finance and Accounting, 2025, vol. 10, issue 1, 25 - 40

Abstract: Purpose: Different groups of shareholders have a growing impact on the financial performance of companies listed on Nairobi securities markets. Policies regarding different ownership structures and the performance of companies at the NSE have led to the growing need to establish how distinct ownership structures influence the performance of this security market. This study sought to establish the relationship between government ownership structure and the impact it brings on the financial performance of firms listed at the Nairobi Securities Exchange in Kenya. Methodology: The study adopted a causal quantitative design and targeted the population of all the 62 firms listed at the NSE, Kenya thereby conducting a census on the study population for a period of 10 years between 2014-2023. Secondary data was sourced from NSE, CBK, CMA, and financial statements of the respective companies listed at the NSE and stored in data collection sheets to aid in the analysis of data. STATA18 software was applied to conduct inferential analysis and correlation analysis using the panel regression model. The research correlation analysis findings depicted a weak negative correlation between government ownership structure and the financial performance of listed companies at the NSE. Findings: The study findings of the panel regression model indicated coefficient values of 2.010 with P values of 0.051. From the overall results, government ownership had a negative effect on the financial performance of companies listed at the NSE, Kenya. Unique Contribution to Theory, Practice and Policy: The study recommended strategies that will encourage more private individuals and institutions to co-own state enterprises, the study recommends that the government look into implementing management practices similar to those of the private sector and advance the divestment program. Furthermore, to provide government-owned firms an advantage in management, the government should think about implementing training in business acumen and entrepreneurship. In conclusion, the study recommends that the ownership structure in Kenya should be restructured to reduce government ownership further to pass more control and decision-making to private investors. However, the government should retain some ownership in foreign and local firms to enhance shareholders' confidence, protection of investments, and managerial monitoring.

Keywords: Government Ownership structure Financial Performance; Nairobi Securities Exchange (search for similar items in EconPapers)
Date: 2025
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