Firm Characteristics and Financial Performance of Non-Financial Firms Listed at Nairobi Securities Exchange, Kenya

Background: This study investigated the effect of firm characteristics on financial performance of non-financial firms listed at the Nairobi Securities Exchange for the period from 2009 to 2018. The firm characteristics examined included: Asset tangibility, Firm growth and Firm age. Materials and Methods: This study used both cross sectional and longitudinal research designs, organized as panel data. The sample population of the study consisted of thirty-three (33) non-financial listed firms. The study employed purposive sampling procedure in the determination of the sample size and secondary data from annual financial reports of the firms, African Listed Companies, Nairobi Securities Exchange publications and Capital market Authority handbooks. The data collected was analysed using STATA which was basically descriptive, correlation and regression analysis. Results: The findings of the study showed a significant negative effect of asset tangibility on financial performance as measured by return on assets (ROA). The findings also revealed a significant positive effect of firm growth on ROA. On firm age, the findings indicated a significant negative effect on ROA. Conclusions: This study concluded that asset tangibility and firm growth have significant effects on financial performance of non-financial firms. The study also concluded that the age of the firm is critical and significant when determining the effect on financial performance of non-financial firms. The study recommended that, listed non-financial firms should maintain a considerable degree of fixed assets and increase other assets to minimize heavy maintenance costs which decrease financial performance of the firms.