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Firm financial performance is essential for corporate survival and prosperity. Financial leverage may be used to enhance corporate financial performance, but it can also occasion financial distress and bankruptcy if not carefully managed. At the Nairobi Securities Exchange, a number of firms face poor financial performance, financial distress, and weak corporate governance, commonly associated with excessive leverage and bankruptcy. Recent corporate finance research shows increasing importance of variables, omitted in prior corporate finance studies, with more practical significance to practicing managers such as debt slack and corporate governance. The purpose of this study was to determine the moderating effect of Chief Executive Officer Power on the relationship between financial leverage and financial performance of listed companies at the Nairobi Securities Exchange. The specific objective was to determine the conditional effect of Chief Executive Officer Power on the relationship between Debt-Equity ratio and firm financial performance. The study was grounded on dynamic trade-off, pecking order, agency, and upper echelon theories. Positivist research paradigm with a descriptive research design using a linear regression model on Panel data obtained from a survey of 38 listed companies at Nairobi Securities Exchange over the period 2010 to 2019 was used. The data was mined from financial statements filed at the Nairobi Securities Exchange. Controlling for Firm size, Sales growth and operational efficiency, the study found Chief Executive Officer Power to significantly moderate the relationship between Debt/Equity ratio and Return on Equity (∆R2 = +0.1314;ꞵ = 0.1019455, p=0.000), with scope for lower levels enhancing Return on Equity while higher levels dampening. The study recommended a low Chief Executive Officer Power configuration mandate. The study contributes to theory development by establishing executive power contingency to theories relating financial leverage to firm financial performance; to knowledge by developing a tool for measurement of Executive power; and to policy by providing empirical evidence for regulation of executive power. The study scope was limited to structural and shared ownership sources of Chief Executive Officer Power and recommends further research incorporating personal sources of power.

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