Debt Restructuring and Financial Performance of Non-Financial Firms Listed at the Nairobi Securities Exchange, Kenya
DOI:
https://doi.org/10.47604/ijfa.3756Keywords:
Debt Restructuring, Financial Performance, Non-Financial Firms, Nairobi Securities Exchange, KenyaAbstract
Purpose: Non-financial institutions, including those listed at the NSE, Kenya, have in the recent past carried out restructuring strategies in an attempt to stay afloat in their respective competitive business segments. Some of these restructurings have not turned around the respective firms as per the expectations of stakeholders. The general objective of the study was to investigate the influence of debt restructuring on the financial performance of non-financial firms listed on the NSE, Kenya.
Methodology: This research used a descriptive research design and a census technique in which all the 45 non-financial firms listed at NSE, Kenya, were analysed. Data was gathered from secondary sources with the aid of a secondary data collection sheet and analysed using descriptive and inferential statistics. The descriptive statistical tools will include frequencies, percentages, means, variances, and standard deviations. Inferential statistical tools included Pearson’s Product-Moment correlation and panel regression analysis. A diagnostic test was conducted to test the assumptions of the regression model and panel regression for inferential analysis.
Findings: The panel regression results revealed that debt restructuring had a positive and significant effect (β = 0.1926, p = 0.0075). The model explained approximately 53.68% of the variation in financial performance (R² = 0.5368), indicating that debt restructuring is a key determinant of firm performance. The study concludes that debt restructuring significantly enhances the financial performance of non-financial firms listed at the NSE.
Unique Contribution to Theory, Practice and Policy: The study recommends that firm management should adopt proactive and integrated debt restructuring strategies. Policymakers, including the CMA, should develop supportive regulatory frameworks that facilitate efficient restructuring processes and enhance transparency in financial reporting.
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