Abstract:
Financial performance of listed firms draws attention not only
from the government but also shareholders and other stakeholders. The
management thus works around the clock to implement the strategic
plans as well as turnaround strategies. To achieve this, more emphasize
is on investment and financing decisions including the general corporate
governance as key ingredients of boosting financial performance of firms
in Kenya. Existing empirical studies have focused on the study variables
even though not collectively. To fill the gap, the study therefore sought
to establish the moderating effects of capital structure and corporate
governance in the relationship between asset structure and financial
performance of construction and manufacturing firms listed in Kenya. As
guided by agency and stewardship theories, post positivist research
paradigm and explanatory research design were used. Secondary panel
data collected from 12 listed firms was analyzed using both descriptive
and inferential statistics. From the panel regression analysis results,
both noncurrent as well as current assets positively and statistically
significantly affected financial performance. Given interaction analysis,
capital structure had a negative and insignificant moderating effect in
noncurrent assets-financial performance linkage. On the other hand,
capital structure positively and significantly moderated current assetsfinancial performance linkage. Moreover, a positive and significant
moderating effect of corporate governance was documented given the
nexus between noncurrent assets and financial performance. Similarly,
corporate governance positively and significantly moderated current
assets-financial performance linkage. The study thus concluded the
existence of enhancing moderating effect, since increase in capital
structure increased the effect of currents assets on financial
performance. Moreover, corporate governance was an enhancing
moderating given that its increase led amplified the effect of asset
structure, that is, noncurrent and current assets, on financial
performance. Other than the findings having theoretical and practical
implications, further research was expected to extend the
