Abstract
In Kenya many listed non-financial firms have undergone financial distress. This has led to loss of investors’ wealth and erosion of confidence in the capital market. The specific objective of this study was to examine the effect of cash management and financial distress of non-financial firms listed in the Nairobi Securities Exchange Market in Kenya. The study adopted panel (pooled) research design. A census of all the 41 non-financial firms listed at (NSE) as at December 2016 constituted the population of study in the period 2007 to 2016. The study used secondary data which was extracted from the financial statements and published annual reports of individual companies using secondary data collection sheet. Multiple regression analysis techniques were used to analyze the data. Fixed effects model was used to model the relationship among the study variables. The F- test was used to determine the significance of overall model; while the t- test was employed to establish the significance of the independent variable. The results of this study were expected to mitigate losses through establishing cash management techniques for use in financially distressed non-financial firms trading on NSE. The study found that cash management had a positive and significant effect on financial distress. The study therefore recommended that in order to mitigate financial distress among non-financial listed firms cash conversion cycle (a proxy for cash management) should be increased.