The relationship between corporate governance practices and financial performance of property management companies in Kenya
The aim of this research was to determine the relationship between corporate governance practices and financial performance of property management companies in Kenya. The corporate governance practices included board of director's composition, role of audit committee, role of internal audit, effect of the size of the board, frequency of meeting, ownership concentration and the role of the management. The researcher used a random sample research design to determine the relationship between governance practices and financial performance . The sample comprised of 25 property management companies in Kenya. The data set comprised of both secondary and primary data. Secondary data was obtained from the financial statements of respective companies. The study sampled observations for the 5 year period from 2004-200S.A structured data sheet was used to collect secondary data. A multiple regression model of financial performance versus governance characteristics was applied to examine the relationship between the variables. The study established that financial performance of property management companies in Kenya is influenced by corporate governance practices. The findings have been found to concur to previous evidence from empirical studies on corporate governance. The findings indicate that property management companies have adopted various corporate governance practices in order to improve on their financial performance. The external auditor's reports are tabled in audit committees which meet often enough to discuss all the queries raised. The study concludes that members of the audit committee are conversant with prudent financial management practices and are informed, vigilant and effectively overseas the financial reporting process and internal control functions of the company. The study also concludes that property management firms adopts appropriate financial strategies and decisions to ensure financial stability.