An analysis of corporate governance reporting in companies listed at the Nairobi stock exchange in Kenya
Maina, Agnes M
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Corporate governance is about putting in place the structure, processes and mechanisms by which business and affairs of the company or firm are directed and managed, in order to enhance long term shareholder value through accountability of managers and enhancing firm performance. In other words, through such structure, processes and mechanisms, the well-known agency problem - the separation of ownership (by shareholders) and control (by managers) which gives rise to conflict of interests within a firm may be addressed such that the interests of the managers are more aligned with those of shareholders. The research objectives were to establish whether the NSE listed companies in Kenya comply with the disclosure requirements of CMA guidelines on corporate governance practices. To establish whether the NSE listed companies disclose non-compliance with the CMA guidelines on corporate governance and also to establish whether and what NSE listed companies provide as extra information on corporate governance than required by the CMA guidelines. This study is an analysis of published corporate governance information in the annual reports of the NSE listed companies in Kenya, based on the Capital Markets Authority’s corporate governance disclosure requirements. This study is an analysis of published corporate governance information in the annual reports of the NSE listed companies in Kenya, based on the Capital Markets Authority’s corporate governance disclosure requirements. The population of the study was all companies quoted at the Nairobi Stock Exchange. Data and evidence collection was based on an analysis of secondary data which was obtained from annual accounts and reports of the NSE listed companies for the year 2010.The data was analysed per sector and tabulated from the data collection forms whereby the rate of compliance was calculated. The extra corporate governance information disclosed was grouped to various categories. Findings are presented in form of tables, graphs, charts and brief narratives. The study established that majority of the NSE listed companies adhere to the CMA disclosure requirements on corporate governance. It also established that the NSE listed companies report on many diverse areas of corporate governance practice beside the CMA disclosure requirements. The guidelines on corporate governance practices by public listed companies in Kenya were issued by the Capital Markets Authority in 2002.They should be reviewed since the companies declare compliance with them and are obviously outdated. This is more so because the operating environment has changed significantly. The statutory laws have also changed, for example there is a new constitution, and the Companies Act was reviewed. The Capital markets Authority should also advance its regulation on the listed companies so as to avoid corporate collapse and scandals.