DO THE MILLER AND MODIGLIANI RELEVANCE AND IRRELEVANCE THEORIES OF CAPITAL STRUCTURE HOLD AMONG LISTED MANUFACTURING COMPANIES? EVIDENCE FROM KENYA
DO THE MILLER AND MODIGLIANI RELEVANCE AND IRRELEVANCE THEORIES OF CAPITAL STRUCTURE HOLD AMONG LISTED MANUFACTURING COMPANIES? EVIDENCE FROM KENYA

Summary/Abstract: The study tested the Miller and Modigliani relevance and irrelevance theories of capital structure among quoted manufacturing companies in Kenya using a sample of eleven (11) listed manufacturing firms in the Nairobi Stock Exchange in the period 2006 to 2019. The findings invalidated the capital structure irrelevance theory of Modigliani and Miller (1958) among listed manufacturing firms in Kenya. On the other hand, the study finding validated the capital structure theory of Modigliani and Miller (1963). It suggests that capital structure is relevant among the listed firms in Kenya. The study recommends that researches be conducted to test the theories on the market value of small and older firms in sectors of Nigeria economy and in other Sub-Saharan African countries. The study contributed to knowledge in that it is the first to validate the Modigliani and Miller irrelevance and relevance theories of capital structure among quoted firms in Kenya using advance dynamic panel estimation in the form of two step system general methods of moment.

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