EFFECT OF ACCOUNTING INFORMATION ON FIRM FINANCIAL PERFORMANCE: A CASE OF AGRICULTURAL FIRMS LISTED IN THE NAIROBI SECURITIES EXCHANGE

The purpose of the study was to investigate the effect of accounting information on firm financial performance of agricultural firms listed at the Nairobi Security Exchange. The study was guided by two objectives; t o establish the effect of liquidity on the financial performance of agricultural firms listed at the Nairobi securities exchange and to determine the effect of dividend payout on the financial performance of agricultural firms listed at the Nairobi securities exchange. The study adopted a descriptive research design. The target population consisted of all the listed agricultural firms at the Nairobi Securities Exchange (NSE). The study used stratified sampling technique. The study’s sample was classified into three strata; senior managers, line managers (finance department management) and the junior staff of the companies. Primary and secondary data was used where primary data was collected using questionnaires. The secondary data was obtained from the company’s published reports. Data analysis was done qualitatively and quantitatively using the statistical package for social scientists (SPSS V20) for both descriptive and inferential statistics. Regression analysis was used to show the sensitivity of profitability (PBT), ROA and ROE to various independent variables. The findings indicated that there was an increase in financial performance in the firms .This was demonstrated by the extent of agreement with the statements in the questionnaire regarding financial performance. Findings indicated that liquidity and a dividend payout affected financial performance agricultural firms listed on NSE. Findings led to conclusion that liquidity was a significant tool in explaining financial performance. It was also possible to conclude that there was a positive and significant relationship between level of dividend payout and financial performance; it was possible to conclude that there was a positive and significant relationship between leverage and financial performance. From the findings and conclusion, the study recommended that there was need for agricultural firms listed at the Nairobi Securities Exchange to increase their current assets so as to increase their liquidity as it was found that an increase in current ratio positively affect the financial performance. Another study be undertaken to cover other private agricultural firms in the broader industry. Key Words: liquidity, Dividend Payout, Accounting Information