Effects Of Corporate Governance On Firms’ Value Among Non Financial Companies Listed In Nairobi Securities Exchange

Abstract

Maximization of shareholder wealth has been argued as the key reason for existence of organizations and as a result managers have been urged to concentrate more on firms’ value as opposed to the common practice of profit maximization. In achieving the same, there are factors which have to be put into consideration. Some of these factors which are the variables of this study are the corporate governance, financial performance of corporations, the sizes of their audit committees and the firm liquidity positions. This study wanted to establish how the variables affect the value of corporations with a key emphasis on the corporate governance. The research has established that corporate governance, financial performance and the liquidity of a company affect the value of a firm positively with the corporate governance having the highest effect followed by the financial performance and liquidity the last. The study has also established that the size of audit committee affects the firm value negatively. Managers should also note that these four factors account for 12% of the changes in the value of a firm and thus they should invest in research to understand all those factors affecting the firm value with a view to maximising the wealth of their shareholders. The major limitation of the study was that the research relied on the information of non-financial firms listed in the NSE for five consecutive years from 2014 to 2018. The researcher could also suggest on further researches also put into consideration the non-listed firms and the Small and Medium enterprises which have not been considered in previous studies