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School of Business and Economics

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End date: 2019Subject: search.filters.subject.Corporate governance

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    Influence of Corporate Governance on Financial Performance of Listed Corporations in Kenya
    (KeMU, 2019-09) Gitonga, David
    Corporations with government shareholding in Kenya have served different purposes in different industries since their establishment during the colonial period. Despite tight regulatory framework, Corporate Governance continues to weaken in Kenya. The purpose of the study was to investigate the influence of corporate governance on financial performance of listed corporations with government shareholding in Kenya. Specifically, the study sought to examine the influence of financial transparency, internal audit standards, internal controls and ownership structure on financial performance of listed corporations with government shareholding in Kenya. The study was anchored on stakeholder theory, stewardship theory, agency theory, and resource dependence theory. This study adopted descriptive survey design. The target population of the study was 98 CEO’s, general managers and managers drawn from 12 corporations in Kenya with government shareholding. The study adopted census design where all target corporations were sampled. Primary data was collected using structured questionnaires while secondary data collection sheet was used to collect secondary data. Using collected data, descriptive statistics such as mean, standard deviation and frequency distribution were used to analyze the data. Data presentation was done by the use of charts, percentages and frequency tables Inferential statistics were used in drawing conclusions A t-test was conducted to test the significance of the results at 5% level of significance. Univariate tests were used to provide an insight using both parametric (t-test) and non-parametric test (Pearson correlation coefficient). Statistical Package for Social Science (SPSS) Version 25 was used for data analysis. The results showed that there was a moderate positive correlation between financial transparency, internal audit standards, internal controls, ownership structure and financial performance. Regression analysis results showed that financial transparency, internal audit standards, internal controls, ownership structure explain 71 per cent of variance in the financial performance of corporations. The study established that financial transparency leads to reduced conflicts between shareholders and managers. The corporations voluntarily provide forward looking information and the corporations are mandated by regulations to disclose all financial statements which are accessible to all stakeholders at any time. The study concludes that corporations targeted engage members who have financial knowledge and experience in the committees. The management of sampled corporations enjoys cordial relationships with audit committee and internal auditors observe professional ethics & standards. The study recommends that management of corporations should adhere to laid down regulations on financial disclosure to avoid agency conflicts with shareholders and creditors. The information disclosed by the corporation should be adequate to enable stakeholders to make informed decisions and should be forward looking. The study recommends that the management and regulators of listed corporations should only recruit and select those members who possess financial knowledge and experience to be part of internal audit committees.
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    Analysis of the Relationship between Corporate Governance of Banks in Kenya. A Survey of Selected Banks in Kenya
    (KeMU, 2013-06) Mwebia, Kendi Doris
    The corporate governance function is intended to develop ownership structures and corporate governance structures for companies to ensure managers behave ethically and make decisions that benefit shareholders. Many firms have been faced by the challenge of corporate governance that has led to collapse out poor financial performance. The study basically was meant to find out relationship that exists between corporate governance and financial performance of banks in Kenya and various variables are going to be examined that includes, Directors' ownership, Board size, Board Composition and ownership of the banks. Literature has been reviewed on various theories concerning corporate governance that includes agency theory, stewardship theory, stakeholder's theory, Resource dependency theory and transaction cost economics. Various studies have been carried out in the past by other researchers and that is captured in the empirical review of this study. Descriptive research design was applied, and population of the study consists of 20 banks selected from various categories i.e. banks that are locally owned, foreign owned and those that are listed in Nairobi securities exchange. The researcher used purposive sampling. That was done since there was specific information that the researcher wanted and that could only be gotten from specific persons in the organization. Data was collected by use of questioners that covered all questions drawn from all variables of study. Type of data that was used was primary. The data that was collected was analyzed by use of multi-linear regression. The entire research finding provided information that there is a significant relationship between corporate governance practices and financial performance. These factors have made the organizations to properly and effectively manage and observe their financial performances. The extent of board size on financial performances affects financial performances to a great extent, as the number of directors based on activities involved in the bank and also contribution in decision making influences the performances. Also having more directors on the board improves financial performance and improved firm financial performance through proper management involvement and budget allocations. The study recommends that the board size and composition be considered since they affect the financial' performance of the banks. The number of non-executive directors needs to be selected well since they affect financial performance of the bank as compared to those who are executive directors. Further the study recommends that directors' participation in direct corporate governance mechanisms as this will help the entire bank performances.