Equity Share Capital and Market Capitalization of Non-Financial Firms Listed at the Nairobi Securities Exchange, Kenya

Zacchaeus Agembo Agembo (), Joshua Matanda (), Charles Roche () and Charles Roche ()

International Journal of Finance and Accounting, 2025, vol. 10, issue 2, 61 - 77

Abstract: Purpose: The diminishing growth of many of the non-financial enterprises listed at the Nairobi Securities Exchange (NSE) discourage investors from investing in these firms. Concerning the question of whether there is an ideal financial structure that maximizes the firm's value, academics, business managers, investors, and other stakeholders face a significant challenge in ascertaining the ideal financial structure of these firms. The study general objective was to study the effect of equity share capital on market capitalization of non-financial firms listed at the Nairobi Securities Exchange. Methodology: The target population of the study comprised of 45 non-financial firms listed at the NSE for a period of seven years. A descriptive research design was adopted with a census method focusing on 45 non-financial firms listed at the NSE, Kenya. Data was encoded and processed using statistics software (STATA version 18). Inferential statistics was adopted using the panel regression model. A data collection sheet was used to collect data of the listed non-financial firms and the outcome presented in tables using statistics such as means, standard deviation, frequencies, and percentages. The findings indicated the presence of a weak and positive correlation between equity financing and market capitalization. Panel regression model was applied for data analysis. Findings: The findings of the panel regression model indicated a positive and significant effect between equity financing and market capitalization of non-financial firms listed at the NSE, Kenya. Unique Contribution to Theory, Practice and Policy: The study was guided by the Market Timing Theory. The study recommended to managers to have equity shares leveraged by stakeholders in order to increase market capitalization and build resilience in the face of unstable market conditions.

Keywords: Equity Share Capital; Market Capitalization; Non-Financial Firms (search for similar items in EconPapers)
Date: 2025
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