Effect of Corporate Governance Practices on Financial Performance of Listed Agricultural Firms in the Nairobi Securities Exchange
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Date
2017Author
Ngwenze, Miriam K.
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The objective of this research was to determine the influence of corporate governance
practices on financial performance in listed agricultural companies in Kenya. The
corporate governance practices included board of directors’ composition and size,
independence of board and audit committees. The researcher used a descriptive
correlation research design to determine the relationship between corporate governance
practices and financial performance. The population comprised of all the seven firms that
were listed in the Nairobi Securities Exchange (NSE) in the period 2012-2016. The data
set comprised of secondary data collected from annual reports. A multiple regression
model of financial performance against corporate governance practices was applied. It
was found the R2 values were sufficiently less than 0.5 for ROA and ROE implying low
predictor power while that of debt equity ratio was high that shows that some companies
had violated the CMA Act threshold of three directors in the audit committee while other
had poor board composition, also breached was benchmark set by the CMA Act for the
independence of directors. The study established that corporate governance practices
have no significant influence on ROE and ROA of listed agricultural firms in Kenya.
However, it had significant influence on debt equity ratio The findings concur with
previous evidence from empirical studies on corporate governance, indicating that
adoption of the various corporate governance practices by listed agricultural firms plays a
part in the improvement of their performance financially. It was concluded that most
agricultural firms had not adhered to the rules and guidelines issued by CMA. The valid
model explained moderately the variations in performance of the firms and confirmed
that corporate governance practices employed by listed agricultural companies in Kenya
influence their financial performance.
The study recommends that the Government ought to enforce measures laid down on
corporate governance to ensure public organizations are following them
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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