Corporate governance and performance in the heritage insurance company limited
Abstract
Apart from many research work done on governance and performance, this project
examines the link between corporate governance and company performance. Corporate
governance is not a new concept in the business world today. It has been generally
agreeable from many studies in the recent past that companies that have corporate
governance systems in place also exhibit good performance. Thus corporate governance
is increasingly being recognized as an important aspect of an efficient and effective board
of directors, enhancing investment performance.
This study involves an extensive literature review of corporate governance aspects
including meaning of corporate governance from different perspectives such as economic
view, company’s perspective, public policy perspective and stakeholder view; pillars of
good corporate governance; corporate governance theories; corporate governance
principles, code of best practice and guidelines; role of board of directors. The literature
also attempts to link the various corporate governance principles to organizational
performance. Some results of previous studies that have sought to link corporate
governance aspects to performance are also reviewed here.
A case study had been carried out on The Heritage Insurance Company Limited to have
an indepth analysis of the underlying linkage between good governance practices and
organizational performance. The research used a scorecard methodology to allow
evaluation of corporate governance principles and practices. Various corporate
governance variables and selected performance indicators as prescribed in performance
matrix given by the Government of Kenya had been used to establish the link.
The results had shown that the Company has a strong governance system in place and a
correspondingly steady growth in their performance even in hard times of premium
undercutting, and economic downturn. The impact had also been seen when the Company
implemented one of the accounting guidelines which is deemed unpopular during hard
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times that ended in decline in profits. Thus there is a link between the corporate
governance practices and organizational performance.
Apart from time constraint, only a selected set of corporate governance variables and
performance indicators were used. At the time of the interview, there were also other
intervening factors to the Company being studied such as the ongoing mergers and
acquisitions within their business group. Therefore, a clearer picture may be established
through further investigation by looking at other intervening variables that may impact on
performance.
Citation
Master of business administrationPublisher
University of University School of Business