FACTORS INFLUENCING EARNINGS GROWTH RATE FOR COMPANIES LISTED AT THE NAIROBI SECURITIES EXCHANGE

ABSTRACT

This study sought to establish the factors that influence earnings growth rate for companies listed at the Nairobi Securities Exchange. The study adopted a descriptive research design. The study used secondary data obtained from published financial statements of companies listed at the Nairobi Securities Exchange. The population of the study consisted of the 65 companies listed at the Nairobi Securities Exchange over the period 2015 to 2018. A sample of 27 companies was selected using simple random sampling. The study found that net profit; Retention ratio; Total assets turnover; Leverage and Size of the firm were found to have a positive effect on earnings growth rate. The study concluded that net profit margin; retention ratio; total assets turnover; and leverage were significant determinants of earnings growth rate for companies listed at the Nairobi Securities Exchange, while firm size was not a significant determinant of earnings growth rate for companies listed at the Nairobi Securities Exchange. The study recommended that to achieve higher earnings growth rate, corporate managers should focus on increasing the net profit margin.

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Author
Ogilo Fredrick, Suhail Sayani, Swaleh Salim.