Effect of Equity on Financial Performance among Small Business Firms in East Africa Countries

Small business firms are an essential force of the financial system and the catalyst of the economic development not only for developed countries but also contribute to the developing countries. This study determined the effect of equity on financial performance among small business firms in East Africa Countries (EAC). The study adopted a panel data research design and cross - sectional survey research design where by secondary data were used. The population applied on the financial records of the 2,868 from 2016/17 - 2018/19 financial years (Annual Data). The sample size of the study was 828 observations from 296 small business firms registered as manufacturing service. Dar es Salaam, Arusha, Mwanza, Mbeya, Morogoro and Dodoma Regions were purposively sampled to be used as research locations of this study. Random sampling procedure was used to select small business firms registered as manufacturing service for all 6 Regions. The data collected from different reliable sources which included the Small Industries Development Organization (SIDO) and Business Registrations and Licensing Agency (BRELA). Results revealed that, the equity had statistically negative influence on the financial performance among small business firms of EAC in terms of Return on Capital Employed (ROCE) and Return on Equity (ROE) with P- Values -0.001 and -0.14 respectively and a significant positive influence on the financial performance of small and business firms of EAC in terms of Return on Assets (ROA) with P- Value 0.001.The study recommends small business firms to consider the essential determinants like size of the business which influence the financial performance among small business firms and minimize liquidation risk