Determinants of Capital Structure in the Cement Mining Industry on the Nairobi Securities Exchange

Abstract

In today's competitive corporate and economic landscape, businesses strive to increase their value by acquiring additional funds or capital for expansion. These funds can be obtained internally, externally, or through loans, including international borrowing. This study specifically focuses on the factors that influence the capital structure of mining companies listed on the Nairobi Securities Exchange. It highlights that businesses in a competitive corporate and economic environment often aim to enhance their value by considering various financing options, such as internal funds, external sources, or loans, including international borrowing. Previous studies have indicated that factors like profitability, company size, asset structure, and external elements such as commodity prices can impact a firm's capital structure, which is typically represented by the debt-to-equity ratio. This study employs a cross-sectional research design to investigate the determinants of capital structure among mining companies listed on the Nairobi Securities Exchange. The findings emphasize the significant role of profitability and asset structure in shaping capital structures. Additionally, commodity prices and company size also exert an influence. The study provides valuable insights into how firms, especially those in developing countries like Kenya, manage their capital structures in the face of various economic and industry-specific challenges.