Factors affecting investment decisions among listed firms in the Nairobi securities exchange.

Abstract

The importance of investment decision-making cannot be overstated since many of the factors that result in a firm’s success or failure are directly tied to the choices of decisions made. When wrong investment decisions are made, they are not easily reversible and if the firm persists or reverses them, they may lead to bigger losses. It is for this reason that this research sought to investigate factors affecting investment decisions among listed firms in the Nairobi Securities Exchange. The study focused on the following factors: financial market information, investment risk, investor’s financial knowledge, and firms’ profitability to establish whether they influence investment decisions. The study employed a descriptive survey design and targeted 178 finance managers of the 67 firms listed on the NSE. Stratified and purposive sampling techniques were adopted in this study and a questionnaire was used to collect data. The researcher employed descriptive and inferential statistics to analyze data collected from the study. The results were analyzed and presented using tables. Based on the results, the researcher concludes that the four independent variables; financial market information, investment risk, firms’ profitability and investor’s financial knowledge significantly influence investment decisions of firms listed on the NSE.