The relationship between corporate Governance practices and financial performance of Saccos in Murang’a county
View/ Open
Date
2012Author
Kabaiya, Francis M
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The study sought to find out the relationship between corporate governance practices and
financial performance of saccos in Murang’a County. The objectives that guided the study
were CEO duality, number of board committees, independence of supervisory committee and
disclosure. The study had its target population as the Saccos in Murang’a County. They were
all forty three in number. The census sampling method was used for sampling purposes. The
sample size was all the Saccos in Murang’a County. The study employed the descriptive
survey design. The data was collected by use of questionnaires, and secondary data analysis.
The data was analyzed by use of S.P.S.S (Statistical Package for Social Sciences) and
thereafter presented by use of statistical means which were tables and percentages.
The study had the following findings. The study found out that all the Saccos in Murang’a
County had a clear separation of authority with regard to executive function and only 11% of
the CEO’s in the Saccos chaired the board of management. It equally found out that all the
Saccos had systems of board committees in place and the committees exercised the functions
allocated to them by the boards of management. The study was thus a confirmation of the
Saccos satisfying the stipulated regulatory provisions requiring the putting in place of
committees to enhance the functions of management and governance. The study confirmed
the presence of supervisory committees in all the Saccos. The response shows that 53% of the
respondents viewed the supervisory committees as highly independent while 47% of the
respondents held the opinion that the supervisory committees were fairly independent. The
study found out that all the Saccos practiced disclosures to levels allowable by the
membership and constituents across board.
The study recommended the clear separation and definition of functions between the chair of
the board and the C.E.O. This will always create a conducive environment allowing for the
exercise of executive authority and formulation of policy in Saccos. Saccos should thus be
vi
encouraged to always have a clear separation of powers, competitive recruitment of chiefexecutive
officers and have able and competent boards of management for the exercise of
policy formulation and executive function. The study further recommended that Saccos
should always embrace and adopt the system of board committee in totality. This will ensure
the exercise of the function of delegation and the allowance of tapping of talent and
exploitation of previous experiences when the board members sit in the committee that they
are versed with in terms of expertise and exposure.
The study recommended that the independence of the supervisory committees should always
be upheld. The supervisory committees should be put in place and given the mandate to fully
discharge their cause and obligation for the firm’s good. The study finally recommended that
Saccos should always uphold the standards and allowable levels and practices of disclosure
within their ranks. Ministry of Cooperatives and the SASRA should always enforce the
requirements for publishing of accounts, appointment of external auditors and the availing of
information to the membership to safeguard shareholder interests and assure the saccos of
growth.
Sponsorhip
University of NairobiPublisher
School of Business