| dc.description.abstract | Recent global events concerning high-profile corporate failures such as Enron in the US have put back on the policy agenda and intensified debate on the efficacy of board composition as a means of increasing corporate financial performance. The main objective of the study was to establish the effect of board composition on financial performance of companies listed in Nairobi Securities Exchange.
Therefore a descriptive research design was used to study whether there is an effect of board composition on financial performance of firms listed in Nairobi Securities Exchange. The population of interest in this study constituted all listed companies quoted at the NSE for the period of five years from 2008 to 2012. Secondary financial data sources was used for the study, where annual financial reports of individual listed firms’ was used over the five year period where profitability was extracted and used as a measure of financial performance.
The findings showed that Board Composition variables i.e. age, gender, independence and ethnicity considered in the model are significantly associated with financial performance as indicated by their positive mean values and respective standard deviations. From skewness, the study observed that all the variables are positively skewed which clarified that the variables are asymmetrical. Skewness value of all the variables is very near to zero so it is relatively symmetrical. Kurtosis values indicated that all variables have platy-kurtic distribution and it is concluded that variables are not normally distributed.
The study recommends that board composition should be based on age, gender and independence to steer managerial functions as opposed to ethnicity. The study further recommends that female gender should be considered in directorship positions since they are proved statistically to perform better in such positions. The study further recommends that stakeholders in listed companies should take in to account the body composition issues i.e. gender, ethnicity and age when electing board of directors. | en |
