The moderating role of firm characteristics on the relationship between free cash flows and financial performance of firms listed at the Nairobi securities exchange

Citation:
Ochieng DE, JM N, Mwangi M, Mutende EA. "The moderating role of firm characteristics on the relationship between free cash flows and financial performance of firms listed at the Nairobi securities exchange." Journal of Finance and Investment Analysis,. 2017;6(4):55-57.

Abstract:

This paper sought to find out the influence of firm characteristics on the
relationship between free cash flows and firm financial performance. Specifically,
the objectives of the study were two-fold: first, to establish the relationship
between free cash flows and financial performance of firms listed at the NSE; and
secondly, to determine the influence of firm characteristics on the relationship
between free cash flows and financial performance of firms listed at the NSE. The
firm characteristics considered in this study are firm size and age. The study used
secondary panel data which was obtained from all firms listed at the NSE for the
period 2006 to 2015. Regression analysis was employed in data analysis. Results
indicate that free cash flows have a significant positive effect on financial
performance; while firm characteristics have a negative significant moderating
effect on the relationship between free cash flows and financial performance. The
main academic contribution of the study is that free cash flows have a positive
statistically significant effect on financial performance. The study recommends
that firm managers, shareholders and practitioners should focus more on the need
for firms to generate more FCF

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