School of Business

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Subject: search.filters.subject.Corporate governance

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    Effect Of Corporate Governance Practices On Performance Of State Corporation In The Tourism Industry In Kenya.
    (KCA University, 2016) Wanjala, Moses W.
    The main objective of the study was to assess the effect of Corporate Governance practices on performance of State Corporations in the tourism industry in Kenya. It focused on three key areas of the organization governance viz., Board diversity; CEO attributes and audit committee activities as independent variables whereas performance was the dependent variable. Six State Corporations with headquarters in Nairobi formed the target population. The subjects of study were 57 management staff of the six selected SCs, which were chosen based on Census survey since the number was small and manageable. This group was deemed to have needed information that was sought by the researcher since it is involved in planning and executing of organization policies. The management staff also formed the unit of analysis. The study adopted descriptive design and primary data was collected using the questionnaire that was made up of structured, and closed ended questions based on the five point Likert scale where 1 was the lowest (strongly disagree) and 5 being the highest as strongly agree. Before use, the questionnaire was validated through a pilot test on five employees in one of the organizations (KUC) who were not part of the study. The questionnaire was also subjected to Cronbach’s test for reliability. The collection of data involved drop and pick method by the researcher and they were collected after three weeks. After collection, data was cleaned, coded and analyzed with the help of Excel and Stata version 13 software. The analysis was based on descriptive and multiple regression techniques. After the analysis, data was presented in form of charts, tables, percentages and frequencies. The study found out that board diversity, CEO attributes and audit committee activities positively and significantly affected performance in the state corporations in the tourism industry in Kenya,( R- Squared= 53.1%, p<0.05). That signified that 53.1 % of variance in performance was explained by corporate governance practices while 46.9% was attributed to other factors. Further, the study established that individually, board diversity had the highest effect on performance, correlation coefficient (49.4% against audit committee, which posted a coefficient of 32.5%. Therefore, the study rejected the null hypothesis for both board diversity, audit committee, and recommended that the government expedite on diversity in public institutions and empower audit committees for better performance.
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    Organizational factors influencing financial performance of private companies in Kenya: a case of KTDA factories in aberdare ranges regions.
    (Kca University, 2016) Wachinga, Muchire G.
    Financial performance is an important measure of the productivity and effectiveness of an organization. This is because it is an indicator of the ability of an organization in using its resources to generate wealth, profits and returns for stake holders. There are several determinants of financial performance including the resource use, employee productivity, leadership in the organizations. The purpose of this study was to identify and examine how organizational factors which include top management and support team, organizational structure and the corporate governance influence the financial performance of KTDA factories. The aim of the study was to get data on these organizational factors and analyze them with a view of finding out their relationship with financial performance of the of KTDA factories that were sampled. The study used the quantitative research method. A census was done on 9 factory managers and their assistants, finance officers and human resources managers. The total population comprised of 18 factory managers and their assistants, 9 finance officers and 9 human resources managers all totaling 36 target respondents. The study solely relied on primary data for research information. Questionnaires were used to collect primary data from the participants. Regression analysis was done to find the correlation between each organizational factor and tea factories financial performance. The data was analyzed using SPSS software. The study found out that: Most of the respondents rated the organizational structures of the tea factories as highly layered and having occasional opportunities of impairing and negatively affecting the decision making processes. Most of the respondents had the feeling that the members of the top management cadres merited their positions but situations of challenges occasioned by poor employee performance attributed to unqualified personnel in top management positions were confirmed. All the respondents confirmed the tea factories had code of ethics that guided the interactions between the shareholders and the institutions. The ability of the codes of ethics to assure harmonious interactions by the membership was confirmed. All the respondents confirmed there had been instances of strained internal relations which they attributed to the inadequacies of the codes of ethics in use. The study recommended that: organizations should strive to ensure that they have lean organizational structures as a measure of reducing operational costs and enhancing efficiency. In the situation of the tea factories, conferring them with independence from the KTDA parent company may greatly enhance their positions in terms of freeing them from obligations to the parent company. The top management in private companies should equally be implored on to carry out its activities diligently as a measure of ensuring that the ideals of the organizations are met. The organizations should ensure that the recruitment of the top managers is driven by merit and ascension in the organizational hierarchy is meritorious. Private companies should work towards enhancing their corporate governance thresholds to earn industry respect and elicit attention from peers. The tea factories should seek to ensure that the prescribed tenets guiding corporate governance expectations are adhered to as a measure of assuring them confidence from peers and other partners collaborating with them in different lines of business.
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    Effects Of Corporate Governance Structures On Financial Performance Of Large Manufacturing Firms In Kenya
    (KCA University, 2013) Muturi, Alicadius W.
    The objective of the study was to establish the effect of corporate governance structures on the financial performance of large manufacturing firms in Kenya. The structures also referred to as structures of corporate governance includes: independent directors, board size, board committees and CEO duality. Study was guided by the following specific objectives: Determine the effect of Independent Directors on a company’s financial performance, Determine the effect of board committees on a company financial performance, Determine the impact that a company’s board size has on its financial performance, Evaluate how the CEO’s dual role as a company’s chairman and a CEO affects the financial performance of the company. The research design to be used for this study was descriptive design. The target population of this study was the large manufacturing firms in Kenya which are members of Kenya Association of Manufacturers. The population of this study is therefore 108 large manufacturing firms. A sample size of 54 firms was taken. The study used both primary data and secondary data. Data was collected by use of questionnaire. The questionnaire contained likert scale. Data was analyzed mainly by use of descriptive and inferential statistics. Descriptive statistics included mean and standard deviation. Data was also presented by use of graphs, pie charts and tables. Regression analysis was also used to show the sensitivity of financial performance and ROA to various independent variables. Following the study findings it was possible to conclude that all the four variables the Independent variables had an effect on a company’s financial performance. This was supported by majority of the respondents who concluded that independent directors had a mandate to decision making in financial performance. The Independent directors monitor and control activities of executive board of directors to ensure compliance and reduction of opportunistic behaviours as well as safe guarding the assets of the firm. Board committees in the firm ensures that the executive board of directors’ decisions are based on current information derived from the board reports and are in the interest of the shareholders. Coordination and communication problems arising from overcrowded boards impede on company’s performance and causes shareholders to lose money in the company through allowances and inefficiencies. The post of the CEO should be fulltime and should have no duality Regression results indicated that there was a positive and significant relationship between independent directors, board committees, board size and CEO’s dual role as a company’s chairman on financial performance and financial performance of manufacturing firms. The study recommended that the firm should have non executive directors who should constitute at least one third of the board of directors. A company should have small boards so as to have more favorable performance, the appropriate board size should be 7 to 8 members and the post of the CEO/chairman should be full-time
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    Effect Of Firm Performance On Corporate Governance Practices Of Firms Listed At Nairobi Securities Exchange
    (KCA University, 2018) Nyachae, Judy.
    With the heightened sensitivity of shareholders towards corporate governance practices, the study sought to establish the effect of firm performance (ROA) on corporate governance practices of firms listed at Nairobi Securities Exchange. The corporate governance practices studied were board size, number of outside directors, frequency of board meetings and CEO replacement. The study adopted the descriptive study design and the sample consisted of all the firms listed at Nairobi Securities Exchange for a period of 7 years from 2007 to 2013 which ranged between 42 and 61 firms. After calculating firm performance (ROA), the listed firms were classified into declining, improving or mixed firms based on their performance for two consecutive years and corporate governance practices were observed a year later for all the declining and improving firms. Data was analyzed using descriptive statistics (frequencies, means and percentages) as well as inferential statistics (Pearson correlation and simple regression). Pearson correlation was useful in depicting the correlation between the dependent and independent variables whereas simple regression was useful in ascertaining the sensitivity of corporate governance practices to firm performance as measure by ROA. Findings from the study indicated that for declining firms, firm performance had a significant positive effect on the board size as well as the number of outside directors but no significant effect on the frequency of board meetings and on CEO replacement. For improving firms, the findings indicated that firm performance had no significant effect on all the four corporate governance practices. The study recommended that declining firms need to evaluate their corporate governance practices and adopt sound corporate governance practices like improving the number of outside board members who may bring in a wealth of industry knowledge that may assist in successful turnarounds and avoid failure
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    Influence Of Corporate Governance On Performance Of Commercial Banks In Kenya
    (Kca University, 2020) Gitau, Emmah W.
    Corporate governance comprises of policies, practices and rules that guide decisions and operations in an organization to ensure that the interests of shareholders and other stakeholders are served responsibly and effectively. Emerging issues in corporate governance continue to fuel new debate on its effect on firm performance. The general objective of this study was to establish the influence of corporate governance on performance of commercial banks in Kenya. The specific objectives of the study were to establish the effect of board competence, board accountability, compensation decision-making and risk management on the performance of commercial banks in Kenya. This study was anchored on agency theory, stewardship theory and performance theory. The study adopted descriptive research design and the target population was 40 commercial banks that were licensed by central bank of Kenya by December 2019. The study will used structured questionnaire to collect primary data. Data was analysed using descriptive statistics, correlation analysis and multiple regression analysis with the aid of statistical package for social sciences. The study established that board competence had a statistically and significant positive effect on performance of the commercial banks (β = 0.264, t = 2.308, p = 0.027). Board accountability did not have a significant effect on performance of commercial banks (β = -0.128, t = -1.105, p = 0.277) while compensation decision-making had a significant positive influence on performance of commercial banks in Kenya (β = 0.454, t = 4.778, p < 0.05). Besides, risk management had a statistically significant and positive effect on performance of commercial banks in Kenya (β = 0.404, t = 3.211, p = 0.003). Based on the conclusions from the study, the following recommendations are made. First, shareholders of commercial banks should ensure that the board members they elect to oversee running of the commercial banks are competent. The critical factors that these shareholders should consider when electing board members include professional and education qualifications, technical capabilities and experience in the banking industry. On board accountability, regulatory authorities such as NSE and CMA should ensure that boards of commercial banks adhere to honest, clear and open reporting on issues touching on the banks. The study recommends to shareholders to ensure that the elected board put in place effective compensation philosophy that is performance and risk based. Lastly, the study recommends to regulatory authorities to ensure that boards play oversight roles towards operational, market and financial risks that the commercial banks face.
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    Effect Of Corporate Governance On Earnings Management Of Companies Listed In The Nairobi Securities Exchange
    (KCA University, 2022) Nyaguthii, Grace
    For many years, earnings management has become a major issue of policy makers and practitioners because it compromises integrity of financial statements and manipulates financial statement consumers by supplying them with misleading facts about the actual operating results of a business. Due to its importance to nations' economic growth and progress, corporate governance has also set off to be a topical subject. Poor institutional management is a big factor for even well performing firms to collapse. A claim has been made time and again that every corporate entity's governance system influences the capacity of the organization to adapt to external forces that have some effect on its performance. The key goal this study was to examine the effect of corporate governance on the earnings management of Nairobi Stock Exchange listed firms. The study was specifically guided by the following objectives; to establish the effect of board gender diversity, ownership structure, board independence and audit committee on the earnings management of companies listed at NSE. The finding of this study will benefit investors and financial institutions on the variables that influence share prices and provide better financial guidance on earning management. For the purpose of this study, descriptive research design was adopted. The study targeted sixty-two (62) firms listed at the NSE by the end of year 2021 using census. Secondary data was obtained from NSE published financial report for all firms targeted. The study covered a period of 5 years starting from year 2017-2021. Diagnostic post estimation tests that were analyzed included normality tests, multicollinearity tests, autocorrelation tests, heteroskedasticity tests and unit root tests. The data was analyzed using STATA. The findings of the study indicated that board gender diversity, ownership structure, board independence and audit committee all have a positive a significant relationship with the earnings management of the companies listed at the NSE. The study recommends that two-third gender rule should be observed, privately owned business companies provide better results, at least one of the company directors should also be nominated to be a board member and the involvement of a completely independent audit committee in the management of the operations of the company.
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    Effect Of Corporate Governance Practices On Performance Of Public Universities In Kenya
    (KCA University, 2022) Wandera, Daniel
    Although the strategic management literature strongly acknowledges the existence of a relationship between corporate governance and overall organizational performance, some studies have found mixed results. The inconsistency of findings indicates the need for additional research into the ongoing debate about this relationship. As a result, the purpose of this research was to determine the impact of corporate governance on public universities performance in Kenya. Corporate governance plays an important role in the economy and that is why it has attracted a lot of interest in the recent past by various stakeholders as they are becoming increasingly aware of its influence in the socio-economic wellbeing of the organization and the society as a whole. There has been little consensus in terms of theoretical and empirical review on the relationship between two. The objective, therefore, was to establish the effect of corporate governance on the performance of public universities in Kenya. The study was guided by board diversity, board competence and finally the audit committee as the independent variables while the performance of public universities in Kenya as the dependent variable. This study was anchored on three theories which formed the basis of this research. They include, stewardship theory, Fiduciary political theory and stakeholder‟s theory. The research was conducted using descriptive research design. The population of interest for the study was the 26 public universities in Kenya. The respondents were 2 council members in each university giving a total of 52 respondents. Structured questionnaires were used to collect primary data for the study. The primary data was gathered from university council members in public universities in Kenya. Data analysis was done using SPSS version 20 and descriptive and regression analyses were undertaken accordingly. The research discovered a significant positive association between board competence, board diversity and audit committee with organization performance of public universities in Kenya. Its regression analysis found that the collective usage of corporate governance was responsible for 84.3 percent of the variations in performance of these institutions. Corporate governance mechanisms are critical for organizations to adopt in their efforts to increase their performance levels, according to the result of this research. Based on the findings, board diversity had the largest impact on performance followed by audit committee while board competence had the least influence on performance of public universities in Kenya. It is therefore, recommended that board council members and policy makers of the public universities that are yet to adopt effective corporate governance mechanisms should adopt them to remain competitive in this turbulent business environment. It is also suggested that public universities policy makers develop sound policies to guide them when pursuing corporate governance.
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    Impact Of Employee Involvement as a Pillar Behind the Success of Corporate Governance: A Case of Kenya Literature Bureau
    (KCA University, 2015) Kado, Joyce A.
    Effective corporate governance practices are the driving force behind successful operations in most organisations. An organisation that is to thrive well in the competitive business world needs to employ a strong and efficient corporate governance policy and strategy to support it to form a strong corporate identity, and cater fully for the employees. Modern interpretations of corporate governance place more emphasis on the relationships between shareholders and managers or directors when it comes to the leadership of organisations. Neglected in this vast literature is the role of employees in corporate governance. Yet human capital, embodied in the employees, is rapidly becoming the most important source of value for corporations, employees often have a significant formal role in corporate governance. The purpose of this study was therefore to evaluate the effect of employee involvement in corporate governance and its implications to an organization. The main objective of this study was to investigate whether employee involvement is the pillar that enhances the success of corporate governance at the Kenya Literature Bureau. Explanatory research design was applied. The target population for the study comprised of two hundred and sixteen (216) employees at the Kenya Literature Bureau. Due to the homogenous nature of the population in terms of the variables being tested, only 10% of the population was selected for the study, giving a sample size of 25 respondents. Respondents were purposively selected from the eight departments. The number of respondents from each department was proportional to the respective departmental populations as indicated in table 3.2. Primary Data was analysed by aid of the Statistical Package for Social Sciences (SPSS) tool. The findings were presented using descriptive statistics of means, frequencies and percentages. The findings indicated that employee involvement in the activities of the organization is important if the organization is to register success. The involvement should always run across the board to ensure inclusivity of all employees since they are the number one owners of the organization. This study could be used to formulate policies regarding effective corporate governance at the workplace. Chief Executive Officers may use the findings of the research to formulate effective corporate governance policies in their organisations. Recommendations have been made to have organisations include their employees in governance issues in order to remain successful and competitive in the business world.