The effect of finance shared service on financial performance of manufacturing firms listed at Nairobi security exchange

Abstract

Finance Shared services (FSS) entered the corporate environment in the early 1990’s as
\nlarge decentralized firms sought to combine basic transactional processes such as payroll,
\npurchasing and accounts payable, and sell back those services at cost to the individual
\nbusiness units. As companies extend their presence across borders, it becomes
\nincreasingly uneconomical to maintain a duplicate finance and accounting infrastructure
\nwithin each country ofoperation. FSS was therefore created to gain advantage in cost
\nsavings, standardization of process and to increase efficiency.The study sought to
\nestablish the effect of finance shared service on financial performance of manufacturing
\nfirms listed at Nairobi securities exchange.The study adopted descriptive research design.
\nSecondary Data was obtained from Nairobi Securities Exchange 2007-2013 published
\nhandbook. Chi square test was used to analyze association between three years mean of
\nReturn on Equity, Earnings per share, Market price per share and Return on Capital
\nEmployed for period prior to and after implementation of FSS. The study revealed that
\nthere was no association between finance shared service and the financial performance of
\nmanufacturing firms listed at the NSE. The study recommends that there is need for
\nmanagement to understand and monitor the Costs of operations to ensure that controllable
\ncosts are brought minimized with the implementation of FSS since its reduces duplication
\nof key processes that were being done in various branches