Financial Characteristics and Firm Value of Commercial Banks Listed at Nairobi Securities Exchange, Kenya 1. Introduction and Background Firm value is a measure that indicates the fair economic worth of an enterprise (Patrice, 2013). According to Thakor (2014), it is the summation of all the claims of every claimants including shareholders (common and preferred) and creditors (unsecured and secured). In measuring firm value, different approaches are applied when assessing value of private and public companies. Measuring the value of private firms is complicated and is based on a variety of assumptions. Various methods applied in valuing private firms include comparable company analysis, equity valuation metrics and discounted cash flow methods. Conversely, valuation of a public company is easier. Tobin's Q is the most prevalent measure of market value of public companies. This is a ratio of the market value of a publicly listed company to its book value. It is important to establish the factors that influence firm value so as to effectively manage them. In the US, Tailab (2014) indicate that firm value is dictated by age of the firm, leverage, growth rate and liquidity. Other factors that influence firm value include sales revenue and management efficiency. This was supported by Gharaibeh and Qader (2017) who observes that firm value in Saudi Arabia is affected by the firm's growth opportunities, profitability, firm's solvency and market capitalization. Moreover, Purwohandoko (2017) observed that value of the firm is determined by capital structure, return on investment of the firm's projects and the risk management competence of the firm leadership. In Indonesia, Purwohandoko (2017) found that for companies listed in the country's stock exchange, firm value was influenced by capital structure, size of the firm, profitability and growth of the company. This was later supported by Sabrina, Witjaksono and Lusianah (2018) who observed that firm value of public companies in Indonesia was largely influenced by capital structure, investment decisions and dividend policy. In Vietnam, Dang, Vu, Ngo and Hoang (2019) indicated that key positive determinants of firm value were profitability and firm size while capital structure (debt-equity ratio) was a negative influencer of firm value.
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