Effect Of Corporate Governance Structures On The Shareholders Value Of State Corporations Listed At The Nairobi Securities Exchange

Abstract

Corporate governance structures are systems of internal controls and practices that enable the management of entities to become profitable units. These structures encompass the framework that describes the rights, duties and tasks of each group including the senior management team, shareholders and board of directors. Corporate governance structures are usually adopted to improve cost effectiveness, enhance productivity and profitability and minimize the conflict between shareholders and management teams. This study attempted to ascertain the influence of CG structures on the shareholder value of state corporations listed at the NSE. The study was for the ten year period between 2009 and 2019. The descriptive research design was used to sample the population of nine state corporations that are listed at the NSE. The study utilized secondary data from various sources including financial statements and annual reports as well as abridged reports of the listed corporations from the NSE. Data analysis was conducted to derive the mean, the maximum and minimum values. The F-test statistic was calculated at significance level of 5% using the regression analysis. Based on the findings, the F statistic was significant at 3.614. Board meetings was found to have a p-value of 0.030 which was insignificant, board size had a p-value 0.498 which was insignificant and firm size had a p-value of 0.358 which was insignificant. Leverage had a p-value of 0.33 which is higher than 0.05 thus the relationship was insignificant. The study determined that CG structures have a positive influence on the shareholder value of listed state corporations. Therefore, the study recommends that board sizes be determined based on the specific requirements of a given firm and the underlying conditions affecting corporations. Also, the board of directors should plan for and attend a significant amount of board meetings per given financial year to improve planning, implementation and monitoring of strategic objectives