Effect Of Corporate Governance Practices On Performance Of Coffee Factories In Kirinyaga County

Abstract

Coffee sector in Kenya has faced a number of challenges, one of them being the corporate governance issues. This has led to a number of studies being carried out to understand the impact of corporate governance practices on performance of coffee factories. However, limited studies have sought to understand the effect of corporate governance practices on performances of coffee factories. Thus this study evaluated the effect of corporate governance practices on performance of coffee factories in Kirinyaga County. Specifically the study established the effect of board diversity, board size and director tenure on the performance of coffee factories. To achieve this, the study employed descriptive study design with the target population being 114 coffee processing factories that are within 15 coffee societies in Kirinyaga County. The 114 coffee factories formed the sample size of the study with data collected analyzed through ANOVA and thereafter presented in form of themes, tables, graphs and frequencies. The research was on secondary data, available at cooperative societies and the factories. The collected research data was edited then coded, categorized and keyed into Statistical Package for social sciences (SPSS), for final data analysis. Descriptive measures including frequencies, means and percentages were computed. The study also conducted a regression analysis to establish the relationship between the independent and dependent variables. The study sought to know the effect of director’s tenure, board size and board diversity (age, expertise, gender) on performance of coffee factories in Kenya. The study concludes that there is a positive and significant relationship between the directors’ tenure and performance. This could probably indicate the heterogeneity of board which may ensure a greater influx of new ideas for dealing with previously unforeseen threats or new opportunities thereby improving financial performance. In addition, increase in tenure can be associated with increase in experience of handling business challenges and opportunities which when tapped can enhance the financial performance. The study results have been presented in a report to inform both policy and practice through recommendations.