Determinants of Capital Structure Decisions of Listed Insurance Companies in Kenya: A Survey of Insurance Companies in Nakuru Town

Jane Wanjiku Muiruri, Dr. Nemwel Bosire

Abstract: Capital structure decisions are crucial for any business organization because such decisions impacts on the firm's value and its ability to deal with its competitive environment. This study investigated the determinants of capital structure decisions of listed insurance company. The study adopted a descriptive survey design. The study population constituted six insurance companies listed in the Nairobi Stock Exchange with branches in Nakuru Town. The study targeted 50 branch managers and unit managers in 6 listed insurance companies in Nakuru Town. Purposive sampling technique was used to select 50 study respondents among the branch and unit managers. Primary data was collected using questionnaires. Descriptive statistics and inferential statistics were used in data analysis. Descriptive analysis was used to determine the mean values of the variables while inferential statistics was used to establish the association among the study variables. Based on the analysis of the results it is concluded that profitability was the main determinant of capital structure decisions in listed insurance companies followed by tangibility, liquidity and size of the firm. It was also concluded that 8.1% of capital structure decision could be explained by size of the firm, 6.7% by tangibility, 6.6% by liquidity and 9.8% by profitability. There was also a positive relationship between the size of the firm (r =0.494, p

Keywords: CAPITAL STRUCTURE, FIRM SIZE,PROFITABILITY, QUOTED INSURANCE COMPANIES