EFFECT OF BOARD CHARACTERISTICS ON THE FINANCIAL PERFORMANCE OF STATE CORPORATIONS IN KENYA
Abstract
The purpose of the study was to assess the effect of board characteristics on the financial performance of commercial state corporations in Kenya. The study specifically sought to assess the effect of board transparency, board mode of communication, board disclosures and board independence on the financial performance of commercial state corporations in Kenya. This study was guided by the stewardship theory, stakeholder’s theory, managerial hegemony theory and signaling theory. This study adopted a descriptive survey design. The population comprised of the all the 31 commercial state corporations in Kenya. Primary data was gathered by use of structured questionnaires and captured through a 5-point likert scale type. Secondary data on the other hand was collected from the financial records of the all the commercial state corporations. The study collected data using drop and pick method. Questionnaires were dropped and picked later to enable the respondents have enough time to respond to the questionnaires which enhanced reliability. Inferential statistics; regression coefficient and bivariate correlation were used to analyze the relationship of the dependent variable and the independent variables. The study used tables and charts to present output from data analysis. Both correlation and regression analysis revealed that there was positive and significant relationship between board characteristic (board transparency, board communication, board disclosures and board independence) and financial performance of state corporations. The study concluded that state corporations in Kenya were transparent, had good communication channels, disclosed there operations and finally had highly independent boards which enhance the financial performance. The study recommended that few of the state corporations that have not adopted the above board characteristic should do so to boost their financial performance.
Keywords: Board Transparency, Communication, Disclosures Independence Financial, Performance
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DOI: http://dx.doi.org/10.61426/sjbcm.v5i2.712
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