International Journal of Management, Economics and Social Sciences
2026, Vol. 15(1-2), pp. 24 – 47.
e-ISSN 2304 – 1366
https://www.ijmess.com
DOI: 10.32327/IJMESS/15.1-2.2026.2
2026, Vol. 15(1-2), pp. 24 – 47.
e-ISSN 2304 – 1366
https://www.ijmess.com
DOI: 10.32327/IJMESS/15.1-2.2026.2
Influence of Company’s Tax Exposure as Capital Structure Decision on Financial Performance of State-Owned Sugar Manufacturing Corporation Projects in Western Kenya
Mathew Elijah Kawour1
Charles M. Rambo2
Paul A. Odundo3
1 Dept. of Manag. Sci. and Project Planning, Faculty of Business and Manag. Sci., University of Nairobi, Nairobi, Kenya
2Dept. of Finance and Accounting, Faculty of Business and Manag. Sci., University of Nairobi, Nairobi, Kenya
3Dept. of Educational Planning and Administration, Faculty of Education, University of Nairobi, Nairobi, Kenya
Charles M. Rambo2
Paul A. Odundo3
1 Dept. of Manag. Sci. and Project Planning, Faculty of Business and Manag. Sci., University of Nairobi, Nairobi, Kenya
2Dept. of Finance and Accounting, Faculty of Business and Manag. Sci., University of Nairobi, Nairobi, Kenya
3Dept. of Educational Planning and Administration, Faculty of Education, University of Nairobi, Nairobi, Kenya
ABSTRACT
This study examined how a company’s tax exposure, conceptualized as a capital structure decision factor, influences the financial performance of state-owned sugar manufacturing corporations in Western Kenya. Grounded in Modigliani and Miller’s capital structure model and drawing on trade-off, pecking-order, and agency cost theories, the research employed a mixed-methods approach combining descriptive and correlational survey research designs. The study targeted 1,145 employees across five state sugar corporations, from which a sample of 291 was drawn. Data were collected through structured questionnaires (n=261, 89.7% response rate) and supplemented by secondary data from annual audited reports (2015-2019). The secondary data were used to compute the key financial performance indicators. Hierarchical regression analysis with multiple control variables revealed significant relationships between tax exposure and all financial performance indicators. The findings provide valuable insights for policy-makers regarding the impact of taxation on corporate performance and suggest that strategic tax management and capital structure optimization can enhance financial outcomes in state-owned sugar corporations. The study recommends policy interventions to reduce the tax burden on state sugar projects while improving tax planning practices within corporations.
Keywords: Capital structure, company's tax exposure, financial performance, state-owned sugar manufacturing projects, Kenya
JEL: G20, H20, H21, H25
Keywords: Capital structure, company's tax exposure, financial performance, state-owned sugar manufacturing projects, Kenya
JEL: G20, H20, H21, H25
