Distress? Evidence from listed firms in Nairobi Securities exchange with special reference to Inventory levels & plant and equipment newness

Abstract

The main purpose of this study was to determine the relationship between strategic conformity and financial distress among listed firms in Kenya. The study employed panel analysis for a period covering ten years from 2006-2015 for all 64 listed firms in Nairobi Securities Exchange. Findings from random effects multiple regression analysis showed that inventory levels has a positive and significant effect on financial distress (β =0.678; p<0.05) while plant and equipment newness had a negative and significant effect (β=-0.580; p<0.05) on financial distress. This study recommends that firms should ensure that they have policies that regulate inventory levels as this has a positive significant effect on financial distress, while adequate project appraisal should be done to inform acquisition of new plant and equipment.