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Capital structure has been a subject of interest to many researchers over a long period of time because of its importance in financial decision making. As a matter of fact, the amount of debt or equity a company holds significantly determines its survival in the long run. While keeping in mind that the overall objective of the firm is to maximize shareholder wealth and thus increase value, a firm is said to create value when it generates a return greater than its cost of capital. The purpose of this study was to investigate the effects of capital structure on the cost of capital of firms listed at the Nairobi Securities Exchange. The study objectives were; to establish the effects of tangibility on the cost of capital of firms listed at NSE, to determine the effect of equity financing on cost of capital of firms listed at NSE, to establish the effect of long term debt financing on cost of capital of firms listed at NSE and to establish the effect of short term debt financing on cost of capital of firms listed at NSE. The study was informed by trade-off theory and pecking order theory.
About the author
Nicodemus M. Kitukutha, currently doing PhD, in business& management science at University of Debrecen Egyetem-Europe Hungary, MBA-studied at Kenyatta University in Finance & Accounting as well as bachelors-at MMUST, Professional-Accountant (ICPAK)-Kenya. 7 years of working experience in Finance & Accounting, in Kiambu County Government of Kenya.
