EFFECT OF FIRM SIZE ON FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS LISTED IN NAIROBI STOCK EXCHANGE

Abstract

The purpose of study was to assess the effect of firm size on financial performance of manufacturing firms listed in Nairobi Securities Exchange. Manufacturing firms are expected to increase profits from its capital base, but there has been decreasing trend over the years. The decline in financial performance over the period under study can be attributed to the weak capital structure characteristic of the manufacturing firms. Firms' characteristic is all about its capital structure which is the life-blood and nerve center of a business. This study was guided by the following specific objective; to establish the effect of the firm size on financial performance of manufacturing firms listed in NSE, the study was carried out using a correlation design. The target population comprised of manufacturing sector. The secondary data was obtained from annual financial statements of all manufacturing firms prequalified in Kenya, and operated between the years 2012 to 2018. Data was analyzed by use of panel descriptive statistics. The study concluded that Firm size was characterized in Carbacid investments. Firm size as per each manufacturing firms which depicts that Carbacid investments had highest firm size. The firm's size was characterized by financial position being highest mean. The firm's size was not highly characterized by number of employees. This recommended that most manufacturing firms to use number of employees to measure firm size. Thus, there is need to carry out the same study to other sectors especially long period than five years.