Corporate Restructuring on Financial Performance of Insurance Companies in Kenya

Abstract

Corporate restructuring is the new trend in all the sectors, firms are looking for new ways to survive due to the competition, economic crisis and turbulences that have taken by storm our economy. Firms are trying to realign their strategies with the corporate short term and long-term goals, they are trying to adopt to new ways of doing business and production by embracing technology but they cannot do this without doing corporate restructuring. The purpose of this study was to analyze corporate restructuring on financial performance of insurance firms in Kenya. Specifically, the study sought to determine the influence of merger and acquisition, financial restructuring, change in technology and downsizing on financial performance of insurance firms in Kenya. The study was guided by agency theory, the trade-off theory, resource dependence theory and lifecycle theory. The outcome showed that there was a negative and major relationship between downsizing and financial performance, financial restructuring had a positive and significant relationship with financial performance, and change in technology had a negative and statistically significant relationship with financial performance while merger and acquisition had a positive and significant relationship with financial performance.