Abstract
The study investigated the effect of equity share capital and preference share capital on the market value of listed non-financial firms in Kenya. Specifically, it sought to establish the effect of equity share capital and examine the effect of preference share capital on market value. The study was anchored on Pecking Order Theory and Agency Theory and adopted an explanatory research design. The target population comprised 46 non-financial firms quoted at the Nairobi Securities Exchange between 2020 and 2024. Secondary data covering five years, from January 2020 to December 2024, were obtained from audited annual reports. Data were analysed using Stata through descriptive and inferential statistics, including Pearson correlation and multiple regression analysis. The findings revealed that equity share capital had a strong positive and significant relationship with market value (r = 0.853, p < 0.001), while preference share capital also had a strong positive and significant relationship with market value (r = 0.841, p = 0.001). The regression results from the original four-variable model further indicated positive and statistically significant effects of equity share capital (β = 0.347, p < 0.001) and preference share capital (β = 0.337, p = 0.001) on market value. The study concludes that both equity share capital and preference share capital are important financing components associated with the market value of listed non-financial firms in Kenya. It recommends that firms strengthen equity financing through strategic share issuance and long-term investor participation, while also considering preference share capital as an alternative source of long-term financing to support investment and business expansion.
Keywords: Equity share capital, preference share capital, market value, capital structure, listed non-financial firms, Kenya.