INFLUENCE OF CORPORATE GOVERNANCE ON FINANCIAL PERFORMANCE OF LISTED CORPORATIONS IN KENYA

Abstract

The purpose of the study was to investigate the influence of corporate governance on financial performance of state corporations in Kenya. The target population of the study was 130 senior managers drawn from 12 state corporations in Kenya where the government had shareholding. The study sample of 98 respondents was drawn using stratified random sampling. Primary data was collected using structured questionnaires while secondary data collection sheet was used to collect secondary data. The study focused on listed state corporations in Kenya with shareholding from the government. In multivariate analysis, multiple regression analysis model was used to determine the type of the relationship that exists between the independent and dependent variables. Hypothesis was tested by regressing independent variables against dependent variable, financial performance. Statistical Package for Social Science (SPSS) Version 25 was used for data analysis. The study established that financial disclosure leads to reduced conflicts between shareholders and managers. The corporations voluntarily provided forward looking information and the state corporations were mandated by regulations to disclose all financial statements which were accessible to all stakeholders at any time. The study concluded that state corporations targeted engaged members who had financial knowledge and experience in the committees. The management of sampled state corporations enjoyed cordial relationships with a udit committee and internal auditors and observed professional ethics & standards. The study recommended that management of state corporations should adhere to laid down regulations on financial disclosure so as to avoid agency conflicts with shareholders and creditors. The information disclosed by the corporation should be adequate to enable stakeholders to make informed decisions and should be forward looking. The study recommended that the management and regulators of state corporations should only recruit and select those members who possess financial knowledge and experience to be part of internal audit committees. Key words: Financial Disclosure, Internal Audit Standards, Internal Controls, Ownership Structure, Financial Performance CITATION:  Gitonga, D., & Baimwera, B., & Kithinji, M. (2019). Influence of corporate governance on financial performance of listed corporations in Kenya. The Strategic Journal of Business & Change Management, 6 (3), 255 – 271.