The Effect Of Board Characteristics On Firm Value Of Listed Banks In Kenya

Abstract

Primarily, the role of governing boards is to oversight and also support management in its pursuit of increasing the economic value of the corporation. To achieve these, governing boards require an appropriate structure and this according to research, involves several dimensions. The most highlighted dimensions are diversity and complementarity, while others relate to the number of “inside” vis-à-vis “outside” directors, experience, director’s knowledgeability, and board size. Thus, this study sought to examine the effect of board characteristics on firm value of listed banks at the NSE. Specifically, this research sought to determine if board meetings, board size and board gender diversity have an effect on firm value. The study was based on agency theory, resource-based view theory and resource dependency theory. The study employed correlational research design to attain its objective. The target population for the study was 10 banks listed at the Nairobi Securities Exchange during FY’s 2008 to 2021, 14-year data being collected from secondary sources and analyzed using STATA version 12. The study established that, board gender had a positive but insignificant relationship with firm value as proxied by Tobin’s Q, while board size had a positive and significant relationship with firm value, whereas board meetings had a negative and insignificant relationship with firm value.