Effect of Board Diversity on Investments Decisions of Non Financial Firms Listed at Nairobi Securities Exchange

Abstract

The directors’ board is part of the vital bodies employed in decision making for any organization. The board is accountable for complementing the main tactical as well as financial decisions that may include amendments in the composition of capital and investments. As a whole, the company’s board of directors is an essential method to the realization of company investment decisions. This study therefore aimed at establishing the effect of board diversity on investment of firms quoted at the Nairobi Securities exchange. The study employed a descriptive research design and population was made of the 48 non-financial entities at the NSE as at 31st December 2017. The study carried out a census of the 48 firms of the non-financial firms. Secondary data was entirely used for the research and was gathered for a span of 5 years since 2013 to 2018. Data was analyzed by use of descriptive and inferential statistics. Descriptive statistics was used to summarize the study data while inferential statistics included the regression analysis. The results established a negative and insignificant relationship between gender diversity and investment decisions but a positive and significant relationship between education levels of the board members and investment decisions of the non-financial firms listed at the NSE. The results further found a negative and significant relationship between nationality of the board members investment decisions whereas the relationship between firm size and the investment decisions of the non-financial firms listed at the NSE was positive and significant. The study also found that the relationship between profitability and investment decisions was negative and significant while the relationship between firm age and investment decisions of the non-financial firms listed at the NSE was positive and significant respectively.The study concluded that firm age, board members nationality, board members education levels; profitability and firm size significantly affects investment decisions of the non-financial firms listed at the NSE.