Abstract:
Financial sustainability has been a matter of on-going concern for government owned entities, with scarcity of resource and mounting societal needs, the enduring problem has been on how to attain financial sustainability and reduce over-dependency on government subsidy. This study makes strong input to business literature by investigating the determinants of financial sustainability of government owned entities in Kenya. The study formed four specific objectives: to determine the influence of financial resource utilization, working capital management, financial investments and financial risk management on financial sustainability. The study used the Capital structure theory, Working capital management theory, Agency theory and Behavioral finance theory. Mixed research approach was adopted. The target population comprised Government owned Entities in Kenya. A sample size of 36 GoEs were drawn from the target population using Slovin’s formula. Stratified sampling technique was used to select the sample size and stratified random sampling was then used to select the sample. The study recorded a 75% response rate and used both primary and secondary sources of data. Primary data was collected using semi-structured questionnaires. The secondary data involved a review of published information and Financial Statements of GoEs obtained from 2009 to 2015 financial years. The data analysis and interpretation of this study was based on descriptive and inferential statistics; Pearson correlation, analysis of variance were employed. Multi linear regression model was used in explaining the influence of financial resource utilization, working capital management financial investments and financial risk management and their influence on financial sustainability. The study results indicated that, financial resource utilization, working capital management, financial investments and financial risk management had significant positive influence on financial sustainability. The study recommends the need for institutional goals to be set in line with available funds with emphasis on proper projects evaluation and done prioritization before allocation of resources to the most profitable project. Bottom-up approach on resource management be adopted for better resource utilisation. Based on the study there is need for development of policy guidelines on investment for GoEs. Adoption of a hybrid management model style incorporates both public and private interface. Government owned entities to be evaluated using a holistic financial evaluation model approach, not limited to financial evaluation through innovations that encompass the key goals and objectives of government owned entities existence.