Corporate governance and financial performance of state-owned enterprises in Kenya
Corporate governance and financial performance of state-owned enterprises in Kenya
Purpose
This paper aims to report the results of an investigation into the effect of aggregate and individual corporate governance factors on the financial performance of state-owned enterprises (SOEs) in Kenya.
Design/methodology/approach
The paper uses balanced panel data regression analysis on a sample of 45 SOEs in Kenya for a four-year period (2015–2018).
Findings
The panel data analysis results show that board meetings, board skill and gender diversity individual provisions of corporate governance are significantly and positively associated with capital budget realization ratio (CBRR). Moreover, the study finds that aggregate corporate governance disclosure index, board sub-committees, board size and independent non-executive directors are positive but insignificantly related to CBRR.
Research limitations/implications
The current study is based on secondary data, other methods of knowledge inquiry such as interviews and questionnaires may provide additional insights on the effectiveness of corporate governance on financial performance.
Practical implications
Overall, the results imply that corporate governance influences the performance of SOEs in Kenya. The results suggest that Mwongozo Code of Corporate Governance provisions should be changed to increase the number of women representations on board and the number of directors with doctoral qualifications because of their positive impact on the financial performance of SOEs in Kenya. Also, policymakers with remit over SOEs should re-evaluate why other corporate governance appear not to have an impact with a view of making the necessary changes.
Originality/value
The paper contributes to the dearth of literature on the efficacy of corporate governance on the financial performance of SOEs in developing countries.
Corporate governance, Kenya, Mwongozo code of corporate governance, Performance, State-owned enterprises
Abang'a, Albert
70c35df2-d876-4883-8faa-bdf78cd6019f
Tauringana, Venancio
27634458-b041-4bc1-94da-3e031d777e4f
Wangombe, David
da32f051-c625-468f-91eb-e641ec0b1927
Achiro, Laura, Obwona
85b85057-f916-448b-a69d-c72b5421fbf1
Abang'a, Albert
70c35df2-d876-4883-8faa-bdf78cd6019f
Tauringana, Venancio
27634458-b041-4bc1-94da-3e031d777e4f
Wangombe, David
da32f051-c625-468f-91eb-e641ec0b1927
Achiro, Laura, Obwona
85b85057-f916-448b-a69d-c72b5421fbf1
Abang'a, Albert, Tauringana, Venancio, Wangombe, David and Achiro, Laura, Obwona
(2021)
Corporate governance and financial performance of state-owned enterprises in Kenya.
Corporate Governance.
(doi:10.1108/CG-01-2021-0007).
Abstract
Purpose
This paper aims to report the results of an investigation into the effect of aggregate and individual corporate governance factors on the financial performance of state-owned enterprises (SOEs) in Kenya.
Design/methodology/approach
The paper uses balanced panel data regression analysis on a sample of 45 SOEs in Kenya for a four-year period (2015–2018).
Findings
The panel data analysis results show that board meetings, board skill and gender diversity individual provisions of corporate governance are significantly and positively associated with capital budget realization ratio (CBRR). Moreover, the study finds that aggregate corporate governance disclosure index, board sub-committees, board size and independent non-executive directors are positive but insignificantly related to CBRR.
Research limitations/implications
The current study is based on secondary data, other methods of knowledge inquiry such as interviews and questionnaires may provide additional insights on the effectiveness of corporate governance on financial performance.
Practical implications
Overall, the results imply that corporate governance influences the performance of SOEs in Kenya. The results suggest that Mwongozo Code of Corporate Governance provisions should be changed to increase the number of women representations on board and the number of directors with doctoral qualifications because of their positive impact on the financial performance of SOEs in Kenya. Also, policymakers with remit over SOEs should re-evaluate why other corporate governance appear not to have an impact with a view of making the necessary changes.
Originality/value
The paper contributes to the dearth of literature on the efficacy of corporate governance on the financial performance of SOEs in developing countries.
More information
Accepted/In Press date: 18 October 2021
e-pub ahead of print date: 12 November 2021
Additional Information:
Funding Information:
The authors thank the Editor Prof. Gabriel Eweje, Associate Editor Dr Gagan Deep Sharma, and three anonymous reviewers for their constructive comments and recommendations. The authors wish to thank Mr Ouma Peter Ochuodho of National Lands Commission, Nairobi, Kenya for his fruitful and helpful comments. Abang’a acknowledges the research funding provided by Strathmore University. The authors declare that they have no competing interests.
Publisher Copyright:
© 2021, Emerald Publishing Limited.
Keywords:
Corporate governance, Kenya, Mwongozo code of corporate governance, Performance, State-owned enterprises
Identifiers
Local EPrints ID: 452494
URI: http://eprints.soton.ac.uk/id/eprint/452494
ISSN: 1472-0701
PURE UUID: 60454af9-77a7-4241-bc97-e9974cd70bd6
Catalogue record
Date deposited: 11 Dec 2021 11:20
Last modified: 17 Mar 2024 03:14
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Contributors
Author:
Albert Abang'a
Author:
David Wangombe
Author:
Laura, Obwona Achiro
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