CORPORATE FINANCE GOVERNANCE PRACTICES AND FINANCIAL PERFORMANCE OF STATE-OWNED SUGAR COMPANIES IN KENYA
Abstract
This study established the effect of the corporate finance governance practices on financial performance of state-owned sugar companies in Kenya. The specific objectives were to; establish influence of Board composition, board diversity, board of director expertise, board tenure on financial performance. The study was based on stakeholder theory, stewardship theory, resource dependency theory and agency theory. Descriptive survey design was used to explain hypothesized relationships. The study targeted 95 respondents from 5 state-owned sugar firms in Western Kenya. From a target population of 95 respondents, a sample size of 95 respondents was sampled using census sampling technique. The respondents were selected using stratified random sampling. Primary data was collected by means of self-administered structured questionnaires and for purposes of validity and reliability checks, pretested in Kenya Seed Company, a state-owned corporation. Descriptive and inferential statistics with the aid of specialized Statistical Package for Social Sciences, version 28 was conducted. Descriptive analysis such as frequencies, means, standard deviation was utilized whereas analyzed data was presented in tables and graphs. The results revealed that board composition has significant influence on financial performance of state-owned sugar companies in Kenya. An increase in Board composition would results to significant increase in financial performance of state-owned sugar companies in Kenya. Further, board tenure, board of director expertise and board diversity has significant effect on financial performance of state-owned sugar companies in Kenya. The study concluded that the corporate governance practices have significant positive effect on financial performance of state-owned sugar companies in Kenya. The study recommended that state-owned sugar companies in Kenya prioritize the inclusion of independent directors on their boards to enhance oversight, reduce conflicts of interest, and improve decision-making. State-owned sugar companies should aim for a balanced approach to board tenure, encouraging moderate tenure that combines valuable experience with fresh perspectives. State-owned sugar companies should seek diversify the expertise of their board members, ensuring a mix of educational backgrounds, professional experience, and industry-specific knowledge. State-owned sugar companies should actively promote gender, age, and ethnic diversity within their boards to enhance decision-making, creativity, and market understanding.
Key Words: Board Composition, Board Diversity, Board of Director Expertise, Board Tenure
CITATION: Mukanga, P. E., Otinga, H., & Miroga, J. (2025). Corporate finance governance practices and financial performance of state-owned sugar companies in Kenya. The Strategic Journal of Business & Change Management, 12 (2), 165 – 187. http://dx.doi.org/10.61426/sjbcm.v12i1.3206
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DOI: http://dx.doi.org/10.61426/sjbcm.v12i2.3206
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