The extent of debt financing within state-owned corporations in Kenya

Abstract

The public sector reforms’ programme in Kenya, has witnessed five state-owned corporations being privatised, and several more, from hotels to banks, have been scheduled to be privatised. However, many of Kenya’s state-owned corporations are in considerable debt, which reduce their value in the process of privatisation. This study attempted to determine the extent and the theory suitable for explaining debt-financing within the state-owned corporations in Kenya from 2007 to 2011. The study applied both descriptive statistics and a hybrid of cross sectional and longitudinal quantitative surveys. The results observed some level of stability on the aggregate long-term debt ratios, with minimal use of stock market instruments, which implied the application of the agency theory.