| dc.description.abstract | This main objective of this research paper was to investigate the effects of corporate
governance practices on the fmancial performance of insurance companies in Kenya.
Specifically, this study examined board size, board composition, board meeting
frequency, Insider shareholding, CEO duality and leverage and how they affect the
financial performance of insurance Companies in Kenya. Finn financial performance
was measured using Return on Assets (ROA).The study comprised of 45 insurance
companies licensed by Insurance Regulatory Authority during the period of study 2008
to 2012. No sampling was employed and the whole population was considered. The
primary data was collected through the administration of questionnaires to the staff in
these licensed insurance firms the questionnaires were randomly dropped to the
insurance company. Secondary data was collected using documented information from
the company's annual accounts for the period 2008 to 2012. The type of data was
quantitative in nature which was analyzed using the Pearson Correlation and the
regression analysis to fmd out whether there was any effect of the corporate governance
variables on the firm's financial performance. Board size was found to negatively affect
the financial performance of insurance companies as the operations of the companies
had to be slowed or halted as the staff had to await fmal decision because board
members took a longer period to agree on major decisions. There was a positive
relationship between board composition and firm financial performance. However, the
most critical aspect of board composition was the experience, skills and expertise of the
board members as opposed to whether they were executive or non executive directors.
Similarly, leverage was found to positively affect financial performance of insurance
firms. On CEO duality, the study found that separation of the role of CEO and Chairman
positively influenced the financial performance of insurance firms. In terms of
recommendations this study not only contributes to the literature around corporate
governance practices and fmancial performance but insurance companies need to review
their corporate governance structure with the view of improving their financial
performance in future. The board size, leverage and non-executive directorship should
be monitored so as to ensure effectiveness in operations leading to improved financial
performance, in order to implement good corporate governance. Managers need to know
that they should be concerned about the interrelationships between corporate governance
and firm performance. The study findings strongly confirm this correlation and
therefore; insurance companies that adopt and implement good corporate governance
have higher advantage of increasing their performance. More so, this will ensure that
interests of the firm and shareholders are served. | en_US |
