Effects Of Internal Controls On The Performance Of Multinational Financial Services Companies In Kenya

Abstract

The main objective of this research study was to determine the effects of internal control systems on the performance of multinational financial services companies in Kenya. The study reviewed previous scholarly studies whose results suggested a positive relationship between internal controls and organizational performance. Three theories were explored namely: Agency theory, Institutional Theory and Stakeholders Theory. The researcher collected data through questionnaires that were self-administered to the respondents. The collected data was summarized and organized into tables. Data analysis was done using Excel and presented in tables and charts. The researcher analyzed the correlation between one year changes in stock prices of the companies with the strength of the internal control systems in various companies as reported by the respondents. Regression analysis was also carried out with the percentage change in stock prices in the previous year being the dependent variable and the control environment, risks assessment, control activities and monitoring activities being the independent variables. The findings affirmed a correlation between organizational performance and the strength of the internal control systems in the companies studied. The researcher concluded that strong internal control systems are necessary for organizations to survive, grow and utilized opportunities that arises in their environments while controlling risks. The study found that feedback to junior officers was given less priority and therefore recommended regular feedback to be given to all officers including the junior ones in order to strengthen the organization performance.