Moderating Role of Firm Size on the Relationship between Cost of Capital and Financial Performance of Selected Firms in NSE, Kenya

The manufacturing sector has experienced losses in its financial performance over the years.For example in 2016 Mumias Sugar record Ksh 6.3 billion in pretax losses which led to its closure for nearly three months , in 2017 the company still recorded a loss of 6.8 billion, in 2018 the company further recorded a loss of Ksh15.1 billion.One of the factors that were attributed to this low financial performance was poor financing mode.Eveready in 2006 with a listing price Ksh 9.50 was the most speculative share price however it only did well for about a month and then its price fell way below the IPO issue price.ARM cement had huge debts in its capital structure and it reported huge losses hence finding itself in serious debt crises owing creditors more than its net worth therefore the study sought to assess the moderating role of firm size on the relationship between cost of capital and financial performance of selected firms in NSE, Kenya.The study was guided by Trade-off Theory.The study adopted descriptive research design.The unit of observation was manufacturing companies Listed in NSE (NSE).According to NSE there are 8 manufacturing firms that are listed at NSE.The researcher collected secondary data from the audited annual financial reports of 8 manufacturing firms listed in NSE.The study used data collection sheet to assist in data collection.Descriptive and inferential analysis was used in data analysis.From the findings the study concluded that firm size as the moderating variable have a small statistical significant effect on the relationship between cost of capital and financial performance of manufacturing firms listed in NSE.From the conclusion the study recommended that it is important for the management of these firms to consider ways to expand the size of their firms, such as by merging small branches to form larger firms that will positively affect financial performance.