Corporate governance and firm performance of listed family-owned firms in Kenya
Corporate Governance is concerned with the establishment of an appropriate legal, economic and institutional environment that would facilitate and allow business enterprises to grow, thrive and survive as institutions for maximizing shareholder value while being conscious of and providing for the well-being of all other stakeholders and society. Globally family owned business makes up at least two thirds of all businesses in the world. Family owned businesses are fundamentally different in corporate governance from widely held public companies. Family ownership concentrates control and allow greater agency in governance. The question is, is there any relationship between corporate governance and firm performance. This study analyzes whether there is any relationship between corporate governance structures and firm performance of listed family-owned businesses in Kenya. In particular, we examine the corporate governance structures measured using shareholding, board composition, board functioning, control mechanisms and disclosures and compare this to firm performance measured using Return on Equity, Sales Growth, Net Margins and Tobin q. The results of the study enable us to conclude that corporate governance is not related to firm performance for listed family-owned business. Using inferential statistics in analysis of data, it is noted that the results are not statistically significant. The study was limited by the sample size which is comprised of 14 companies which meet the definition of listed family-owned company as a business where the person who established or acquired the firm (share capital) or their families or descendants possess twenty five per cent of the decision-making rights mandated by their share capital.