The Effect of Capital Structure on Share Price On Listed Firms In Kenya. A Case of Energy Listed Firms

摘要

The focus of this study is to investigate the relationship between capital structure and share prices in the Nairobi Stock Exchange. The study assessed effect of debt, equity and gearing ratio on share price. The study was guided by Modigliani and Miller (MM). The study uses panel data pertaining to energy sector over the period 2006-2011 and employs multiple regression method. The results indicate that the variables debt, equity and gearing ratio are significant determinants of share prices for the sector under consideration. Further, gearing ratio and debt were found to positively affecting share prices, while equity negatively affected share prices Keywords: Share Prices, Gearing Ratio, Equity, Debts