MMA Theses and Dissertations

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Browsing MMA Theses and Dissertations by Author "Simiyu, Tonny"

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    Corporate governance effects on financial performance of top 100 Small and Medium Enterprises in Kenya
    (Strathmore University, 2022) Simiyu, Tonny
    The main objective of this research was to establish the effects of corporate governance on the financial performance of top 100 SMEs in Kenya. Specific objectives included analyzing background information on top 100 SMEs’ corporate governance in Kenya, establishing the relationship between board attributes and the financial performance of the top 100 SMEs in Kenya, and establishing management view on the relationship among the top 100 SMEs in Kenya. The dependent variable (financial performance) was measured by return on asset ratio (ROA). Independent variables included board size measured by the number of directors, board gender diversity measured by the number of female directors in the board, and directors’ age measured by the biological age of the directors. This research was grounded on agency theory and resource dependence theory, adopted positivism research philosophy and applied correlational research design. Primary data was collected by way of structured questionnaires. The likert scale was used in the questionnaires. Stata software version 13 was used to analyze panel data with the application of the Hausman test that determined the adoption of Fixed Effects Model after returning 3.79% p-value. Data was collected for a period of five years (2015-2019). The population was 260 with a sample size of 158 top 100 SMEs. The study adopted purposive sampling technique. The diagnostic tests carried out include normality, multi-collinearity, autocorrelation, stationarity, heteroscedasticity, misspecification and reliability tests. A total of twenty-two companies responded from a total of one hundred questionnaires that were submitted reflecting 22% response rate. The independent variables influenced the dependent variable by 19.02%. Director’s age and board size influenced ROA negatively while female directorship influenced ROA positively. On management view, 59% of the respondents believed functional boards improved their financial performance, 45% believed that large boards improved their financial performance and 51% believed that female directors did not improve their financial performance. Recommendations were for SMEs to establish a policy on gender composition as well as the limit on directors age, a similar study could be done but with a higher sample size as well as with more board attributes as variables for a longer period of time probably more than five years. The researcher also recommends for the organizers of top 100 SME challenge (Nation Media Group and KPMG) to encourage these top 100 SMEs to support students and other research organizations on research matters.