MCOM Theses and Dissertations (2024)
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- ItemAssessing factors influencing adoption of Artificial Intelligence in audit of public entities in Kenya(Strathmore University, 2024) Apondi, A. M.The current digital era, industrial 4.0 and surge of financial transactions leading to a deluge of data has complicated the work of contemporary auditor rendering traditional auditing methodologies inadequate. This has birthed Artificial Intelligence (AI) with capacity to match the transmuting nature of fraud. As other professions rush to benefit from AI, auditing has lagged behind with low levels among the big four that includes Deloitte, PricewaterhouseCoopers, Ernst & Young and Klynveld Peat Marwick Goerdeler. Key stakeholders such as professional bodies and Supreme Audit Institutions are under pressure to include risk in audit an arduous task for auditors using traditional methodologies compelling exploration of robotic auditors born from AI. However, the desire to espousal remains low with several factors considered as encouraging or stifling the process. The purpose of this study was to assess factors influencing the adoption of AI in audit of public entities in Kenya. The specific objectives were to determine the influence of technological, organizational and environmental factors guided by Technology Organization Environment (TOE) framework and Diffusion of Innovation (DOI) theory. It targeted all the active audit personnel in the Office of Auditor General (OAG) who is the principal government auditor in Kenya. Simple random sampling was used to select 333 auditors to participate in the study with structured questionnaire to collect data. Validity and reliability of the research instrument was ascertained in a trial study. Data was analysed using both the descriptive and inferential statistics riding on Statistical Package of Social Sciences (SPSS). Descriptive statistics included percentages, means and standard deviations, while the inferential included the multinomial logistic regression, spearman rank correlation and factor analysis. Tables and figures were used in data presentation. The results revealed that technological, organizational and environmental factors positively influence the low adoption of AI in audit of public entities in Kenya with odds ratios that are higher than 1. Organizational factors showed a slight edge over technology, which came second with environmental factors scoring least. However, they collectively accounted for 86.170% of factors that influence adoption of AI in audit of public service entities. To overcome the limitation in smart auditing, the study recommends stakeholders to focus on addressing the factors associated with adoption to match the emerging challenges in the wake of torrential flow of transactional data.
- ItemDeterminants of a saving culture in unit trusts among the young adults in Nairobi County, Kenya(Strathmore University, 2024) Musyoka, M. M.This study seeks to establish determinants of the adoption of unit trusts for savings among young adults aged 18-24 in Nairobi County, Kenya. The specific objectives include: to determine the influence of financial literacy; parental socialisation, peer influence, and level of income, on the development of a savings culture in unit trusts among the young adults aged 18-24 in Nairobi County, Kenya. This study seeks to address a number of knowledge gaps. Firstly, there have been few studies carried out on the determinants a savings culture in unit trusts among the young adults in Kenya. Secondly, there are studies which have been conducted on credit products rather than on savings which has rendered their findings completely inappropriate for this study given the different circumstances surrounding credit products. Thirdly, there has been limited research on the factors that influence the uptake of unit trusts for savings. The study was underpinned by the Consumer Socialisation Theory. The study applied a descriptive correlational research design since it purposed to arrange and explain the various attributes of the study items. The target population of the study was all the 36 licensed trust funds in Kenya. This study used questionnaires for collecting data so as to enable the collection of more thorough inquiries and because it offered the convenience of accessing individuals who have busy schedules. This study applied a 5-point Likert Scale then the Statistical Package for Social Sciences (SPSS) (version 20) was used to carry out descriptive and inferential statistical analysis. According to the results, the young adults have gained financial numeracy and financial knowledge which has improved their financial planning. As youth, they have trained in budgeting which has enhanced their debt management and boosted their ability to save. Their investment or savings practices reflect their level of financial literacy. The young adults have experienced challenges making enough revenue to save. They tend to have impulsive consumption behaviours, to alternate between brands, however, and are also knowledgeable about financial management. The study recommended that the Government needs to come up with funding initiatives for young adults so as to enable them acquire savings products such as unit trust funds. The managers of unit trust funds should come up with promotional strategies that reward individuals for referring others to acquire their products among the young adults since they tend to follow the recommendations of their peers. Given the dearth of local research on the adoption of unit trust funds in general, this study will set the tone for other local researchers and scholars to delve into this category of financial products so as to build on the body of knowledge. The study was limited by individuals who were unwilling to provide information; the 36 licensed unit trust funds, and the four determinants of adoption of unit trust savings. Key words: Financial Literacy; Level of Income; Parental Socialisation; Peer Influence; Saving Culture; Strategic Determinants; Unit Trusts; and Young Adults Aged 18-24.
- ItemDeterminants of tax evasion among individual taxpayers and moderating role of demographic factors in Nairobi Metropolitan area, Kenya(Strathmore University, 2024) Kuria, S. N.This study was motivated to establish the determinants of tax evasion and moderating role of demographic factors of age and level of education among individual taxpayers in Nairobi, Kenya. This was precisely addressed by four specific objectives; namely, to establish the influence of behavioral, administrative and economic factors on tax evasion among individual taxpayers in Nairobi Metropolitan area, Kenya, besides establishing the moderating role of age and level of education. The study was anchored on the Economic Deterrence Theory, Theory of Planned Behaviour, the Classical Growth Theory and the Social Identity Theory. The study was guided by the descriptive correlational research design. The target population was individual taxpayers based in the Nairobi Metropolitan area, Kenya. Based on anecdote data, the target population comprised of 10,411,220 people living in the five counties of Nairobi Metropolitan area, Kenya, namely, Nairobi, Machakos, Kajiado, Kiambu and Murang’a. The total sample size of the individual taxpayers to be randomly sampled were 768. A structured questionnaire was used to collect data. A pilot test was carried out of 78 individual taxpayers before the main data collection exercise in order to assess the reliability and the validity of the questionnaire. Cronbach’s alpha test was used assess the reliability of the questionnaire. The factor analysis model was used by the study to assess the construct validity of the survey tool. Descriptive and Multinomial Logistic regression models were used to show the effect of behavioral, administrative and economic factors on tax evasion among the individual taxpayers in Nairobi Metropolitan area, Kenya, and how age and level of education moderates the relationship between the factors and tax evasion. Results showed that; there is a significant negative impact on the likelihood of major tax evasion for every one-unit increase in the behavioral factors score; for every one-unit increase in the administrative factors score, the odds of major evasion decrease by a big margin; when the economic factors score increases by one unit, the odds of major evasion increased greatly. Additionally, results revealed that age and education moderate the relationship between behavioral factors and tax evasion; between administrative factors and tax evasion; but do not significantly moderate the relationship between economic factors and tax evasion. It is concluded that enhancements in taxpayer behavior, such as increased compliance, ethical tax practices, adherence to religious principles, and positive tax morale, substantially reduce the probability of engaging in major tax evasion. It is recommended that policymakers should promote ethical tax practices and enhance taxpayer behavior through targeted education campaigns and community programs that emphasize compliance, and positive tax morale. Key words: Tax morale, Tax evasion, Classical Growth Theory, Tax Compliance, Tax Incentives
- ItemEffect of company specific characteristics on the adoption of emerging technologies in finance functions: case of non-financial companies listed in Kenya(Strathmore University, 2024) Kebati, P. N.Over the past decade, corporations have taken advantage of low-cost and efficient technologies to automate their finance departments in a bid to gain a competitive advantage through lowering administrative overheads, improving risk management, and ensuring that data that is required for decision-making by business leaders is provided on a real-time basis to ensure quick decision making. The study aimed to assess the level of usage of emerging technologies in the finance function of listed non-financial companies in the Nairobi Securities Exchange (NSE), identify company features and the type of emerging technologies adopted, and identify opportunities for the application of emerging technologies and challenges that hinder the adaption of the emerging technologies. Leveraging the Diffusion of Innovation Theory and Technology Organization Environment Theory, data on company characteristics was collected from primary data sources through a questionnaire administered to the Chief Finance Officers and secondary data from audited financial statements of 34 listed non-financial companies to assess the influence of company characteristics on the adoption of emerging finance technologies through the use of a binary logistic regression model. The findings indicated that the level of usage of emerging technologies in the finance function of listed non-financial companies in the NSE is at the initial phase of development with 21.7% of the companies having adopted the use of emerging technologies. The binary logistic regression model analysis found that company profitability, ownership concentration and ownership concentration and CFO tenure had a negative, relationship with the adoption of emerging finance technologies whilst company liquidity, size age, board independence, number of employees in the finance department, and CFO age had a positive relationship with the adoption of emerging finance technologies and none of the independent variables had a significant relationship with the adoption of the emerging finance technologies. The study also revealed a significant lack of enthusiasm among listed non-financial companies to identify opportunities for adopting emerging finance technologies, citing challenges such as insufficient IT infrastructure, limited awareness of functionalities, and a skills gap, and recommends that Companies invest in foundational tools and necessary talent to reap the potential benefits. This research contributes to the literature on technological innovation and breaks new ground by focusing on non-financial companies listed on the NSE.
- ItemEffect of corporate risk disclosures on firm value of listed firms in Kenya(Strathmore University, 2024) Ang'edu, E.Listed corporations in Kenya encounter internal and external hurdles that jeopardize their competitive edge over the years, resulting in distressed cases, decline in share price, and in severe situations, entire destruction of value, resulting in delisting. The Nairobi Securities Exchange has witnessed significant growth in recent years, but there are questions about the market setting a premium on the deliberate efforts of information asymmetry and corporate governance practices. The general objective of the study is to investigate the effect of corporate risk disclosure on firm value of entities trading at the NSE. The research was supported by the Efficient Market Hypothesis theory, Signaling theory and the Agency theory. The study followed a positivist philosophy focused as it attempts to establish findings from the study variables by empirically demonstrating the influence and effect corporate risk disclosure has on NSE listed entities in Kenya. The study utilized secondary data acquired by content analysis from annual audited reports of 64 NSE listed corporations over 2015-2022. SPSS version 25 and Stata version 18 was used for the balanced panel data analysis in the descriptive statistics, regression analysis, and diagnostic tests employed. The regression results reveal a negative and statistically significant effect of corporate risk disclosure on firm value. This research adds to literature by presenting the findings of an emerging capital market in a developing country and recommends further can adopt further reports like integrated annual reports that will bring out more disclosures and risk statements. Further studies can adopt additional regression models with different type of dataset, have additional control variables and use other measures of firm value like Market to book value to provide a supplementary viewpoint on the relationship between risk disclosure and firm value.
- ItemEffect of data quality dimensions on internal audit performance of insurance companies in Kenya(Strathmore University, 2024) Mbithi, E. M.Data quality has emerged as a key factor in decision-making for firms across a range of industries in today's data-driven economy. The quality of the data obtained, stored, and used throughout business operations will have an impact on the level of success attained in conducting business both now and in the future as data becomes an increasingly significant component of every company activity. Additionally, poor data quality can result in poor business decisions, which can harm the organization's reputation and cause major financial losses as well as poor customer satisfaction and trust issues. Therefore, it becomes crucial to guarantee your organization's data quality. The primary goal of the study was to establish the effects of data quality dimensions on the performance of the internal audit amongst Insurance companies in Kenya. With regard to internal audit performance of Insurance sector in Kenya, the study primarily intended to focus on the following specific objectives: first to examine the effect of data security control on internal audit performance of insurance companies. Secondly, to examine the effect of data completeness on internal audit performance of insurance companies. Thirdly, to examine the effect of data reliability on audit internal audit performance of insurance companies in Nairobi Kenya. Fourth, to determine the effect of time-related dimensions on internal audit performance of insurance companies in Nairobi Kenya and to assess the moderating effect of audit professionalism on data quality and internal audit performance of insurance companies in Nairobi Kenya. The study objectives were anchored by two theories: Agency and Contingency theories. The study used explanatory research design with the target population being four hundred and twenty seven functional area heads from the insurance companies having their head offices in Nairobi County. A sample size of two hundred and six respondents were chosen using simple random sampling, and the sample size was determined using the stratified random sampling technique. Questionnaires were utilized as the research instrument to gather primary data. In order to evaluate the data, regression analysis was applicable with ordinal regression method employed to model the relationship between the ordinal outcome variable and the independent variables with results being presented in form tables, graphs and figures. The results revealed correlation (R) coefficient, R-square value, which shows a determination coefficient of eighteen percent. Then a significant statistical relationship between four variables and dependent variable and performance of insurance companies. The results analysis highlights the benefits of utilising data quality dimensions on insurance company internal audit performance, which was one of the study's primary contributions that was helpful to aspiring academics and researchers. More studies that quantitatively show the impact of the effective use of data quality aspects on internal audit performance, as ours does, are required. The primary objective of data quality dimension analysis in the field of data quality analytics is to enhance the internal audit performance of insurance firms, therefore this area of research was crucial. A fresh contribution to the field of study is the understanding of the elements affecting it. The study recommends that a risk-based approach on data quality analytics should be considered to enhance decision-making and trustworthy reporting. Keywords: Data quality, internal audit, performance, Insurance
- ItemEffects of exchange rate volatility on Kenya-China bilateral trade(Strathmore University, 2024) Miriti, G. K.Developing countries are often associated with trade deficits; Kenya is no exception. Since independence, Kenya has prominently experienced trade deficits, with Kenya's leading partner, China, accounting for over 30% of this trade deficit. Among the factors influencing a country's trade balance, exchange rates are considered fundamental in affecting the level of trade. Despite this, only a few studies have explored the effect of the volatility of exchange rates on trade and trade balance in Kenya, and even fewer studies have examined this relationship by considering Kenya and its leading trade partner, China. This study explored the impact of USDKES volatility and the ensuing implications for this bilateral relationship. Contrary to previous studies in Kenya, this study used disaggregated categorical commodity data to explore Kenya's exchange rate-trade balance nexus. The study was anchored on a positivist research philosophy and employed a descriptive correlational design. The study used the Garch (1, 1) model to model volatility. The ARDL was used to determine the short-run and long-run effects of the exchange rate volatility on imports, exports, and trade balance. The trade data used was for the period ranging from 2005 to 2022. The study's results pointed to an adverse effect of exchange rate uncertainties on imports from China and no significant impact on exports and the bilateral trade balance. The study recommends that the government employ exchange rate policies to reduce the trade deficit level. Additionally, exchange rate policies can promote economic growth in Kenya.
- ItemEffects of flexible work on job satisfaction among Nairobi’s multinational employees(Strathmore University, 2024) Ogachi, C.The study argued that flexible work arrangements have a lengthy historical background but have experienced gradual adoption. However, with the onset of the COVID-19 pandemic, companies globally, particularly for nonessential employees, were compelled to implement flexible work arrangements as a crucial safety measure. The purpose of the study was to determine the effects of flexible working arrangement on job satisfaction in MNCs in Nairobi County, Kenya. The study focused on these objectives: to determine the effect of flexibility in work location on job satisfaction of employees in multinational companies in Nairobi, to ascertain the influence of flexibility in work scheduling on job satisfaction of employees in multinational companies in Nairobi, and to establish the influence of flexibility in the number of hours worked on job satisfaction of employees in multinational companies in Nairobi. This study was based on two key theories: Herzberg’s Two Factor Theory that supports job satisfaction, and flexible firm theory which underpins flexible work arrangements. The study used descriptive research design, and questionnaires to collect data from the respondents. The findings were presented using descriptive and inferential statistics. The study findings revealed that flexible working arrangements have an impact on employee job satisfaction within multinational corporations. Notably, flexibility in work location emerged as a significant contributor to job satisfaction in multinational companies located in Nairobi County, Kenya. The study reported a positive relationship between flexibility in work location, flexible work scheduling, flexible working hours, and job satisfaction. All these aspects of flexible arrangements were found to be significant factors affecting job satisfaction in multinational corporations. As a practical recommendation, the study suggested that organizations consider adopting a combination of flexible working arrangements, along with other motivational factors, to enhance employee job satisfaction.
- ItemEffects of strategic capabilities on sustainable performance in commercial domestic airlines in Kenya(Strathmore University, 2024) Mutua, F. N.In an industry characterized by intense competition, volatile market conditions, evolving customer preferences, effective deployment of strategic capabilities has emerged as a critical determinant of a domestic commercial airline’s performance. Strategic capabilities encompass having tangible and intangible resources, threshold, and core competencies that enable organizations to align resources with their long-term objectives. Airlines that leverage strategic capabilities bolster their competitive positioning and financial stability. Compared to the rest of the globe, Africa’s airline industry performance is below average in market share and profitability. The competitive threats from multinational players globally have made African airlines aware of their precarious situation. That has incentivized the airlines to proactively engage in strategic capabilities to enhance their performance. In Kenya, several challenges face the commercial domestic airlines, including high fuel prices, cost control, fleet replacement, high taxes, and an unconducive business environment. To effectively compete in the global market, competitive strategies have gained traction as a way of enhancing performance, gaining market share, enhancing profitability, and brand loyalty. However, extant literature linking strategic capabilities adopted and influence on social, economic, and environmental performance of domestic commercial airlines is thin. This area has received little attention in academic inquiry. Therefore, the study closed the gap by investigating the effect of strategic capabilities, namely tangible and intangible resources, threshold, and core competencies, on domestic commercial airlines' economic, social and environmental performance in Kenya. This study used a quantitative descriptive research design to estimate the variables. The strategic balancing theory informed the study’s review and utilized positivist research philosophy. Purposive sampling was utilized to select 103 respondents. A questionnaire was utilized to collect primary data. Data was analyzed using descriptive and inferential analysis with SPSS. Ordinal regression was employed to determine the magnitude and nature of the relation between the variables. The result of the study demonstrated that tangible resources, threshold, and core competencies had a positive impact on economic performance of the airlines, while intangible resources had an adverse effect. Intangible resources, threshold, and core competencies positively impacted the airlines' social and environmental performance, while tangible resources were found to have an adverse effect. The study recommends that investment deepening by the national government to create a conducive environment and lower the cost of doing business and airlines to enhance the passenger experience and brand loyalty. Airlines are also encouraged to adopt measures to minimize their carbon footprint by investing in alternative fuels, efficient fleets, and green technologies, and support community initiatives to enhance their reputation and drive sustainable business. The main limitation of the study was that it was a cross-sectional study, hence it is difficult to establish trends or variable patterns over time.
- ItemFactors influencing the level of preparedness to adopt IFRS 17 in insurance firms in Kenya(Strathmore University, 2024) Mutuku, R. M.Financial reporting by insurance companies has been a challenge for a long time and the initial proposal was to have IFRS 4 provide minimal guidelines on these reporting complexities. After a long duration of stakeholder engagement, IFRS 17 came into effect in 2023 although it was approved for implementation in 2018 to assist in accounting and reporting critical issues in complex insurance contracts and features. However, in the close of the year 2023 only 14 insurance firms had fully adopted IFRS 17. The main question of the study therefore was why are insurance firms taking too long to fully adopt IFRS 17? What were the impending factors affecting the level of preparedness to adopt IFRS 17?.The drive of this study was therefore to assess factors influencing the level of preparedness to adopt IFRS 17 in insurance companies in Kenya and the specific objectives were to assess the effect of board characteristics on the level of preparedness to adopt IFRS 17, to establish the effect of financial metrics on the level of preparedness to adopt IFRS 17, to evaluate the effect of type of insurance business on the level of preparedness to adopt IFRS 17 and to establish management views on the challenges and strengths facing the level of preparedness to adopt IFRS 17 on Kenyan insurance companies. The organizational readiness for change theory and the absorptive capacity theory functioned as the study's guiding theories. The population of the study comprised of all 56 licensed insurance companies in Kenya regulated by the Insurance Regulatory Authority of Kenya. It was through structured surveys that primary data was gathered. Secondary data was taken from the Insurance Regulatory Authority’s annual published supervisory reports and insurance companies final financial statements using a data collection sheet covering the five-year period from 2018 to 2022.Panel data regression analysis, correlation analysis and descriptive statistics were used to analyze the data. Inferential results showed that taking all factors, ceteris paribus (solvency ratios, liquidity ratios, earnings ratios, profitability ratios, board size, board composition, number of females in the board, board independence and type of business) the level of preparedness to adopt IFRS 17 in insurance companies in Kenya would be 0.637. The data results analyzed also showed that the seven independent variables had a positive influence, while two had negative influence on the level of preparedness to adopt IFRS 17 in insurance companies in Kenya. Additionally, the ANOVA analysis showed a significant difference between the groups confirming that all the nine variables were fit in the regression equation. Findings also indicated that unit growths in the seven variables (solvency ratios, liquidity ratios, earnings ratios, profitability ratios, board size, board independence and female in the board) would result in a positive growth on the level of preparedness to adopt IFRS 17. On the contrary, a unit growth in board composition and type of business would result in a negative growth on the level of preparedness to adopt IFRS 17. The study recommendations will assist insurance firms in the process of full implementation and assist regulators in promoting stability without reducing size of the industry.
- ItemInfluence of expatriate induction management programs on expatriate performance among Non-Governmental Organizations in Sudan: a case study of Concern Worldwide’s operations in Sudan(Strathmore University, 2024) Lubembe, E. K.Induction program is one thing that local as well as multinational enterprises must put in place for the success of the business and in enhancing employee’s productivity. Humanitarian organizations operating in low-income countries often have to deal with unique challenges like cultural differences, limited resources, and security risks. Moreover, low-income countries also present unique socio-economic and political contexts for expatriate which needs them to be inducted to get well prepared for the working environment in the foreign country. These concerns require a different approach to effectively organize and make the expatriates induction successful. In line with these contextual and knowledge gaps, the objective of this study was to assess the influence of Induction Management programs on Expatriate performance among Non-Governmental Organization : A case study of Concern Worldwide in Sudan with specific objectives being to assess the influence of Expatriate induction training, organizational cultural induction, organizational Safety Procedures Induction and administrative induction program on Expatriate performance in Concern Worldwide in Sudan. The study was based social learning theory, reinforcement theory and a person-centered dynamic theory and how they contribute towards the development of new knowledge on the induction management program and expatriate performance. The study adopted a pragmatism philosophy the research design adopted was the correlational research design and the target population was 150 respondents. Data was collected using both interview guides and structured questionnaire. And the model used for the quantitative data was multiple regression model. While for the qualitative data a thematic analysis was adopted with the aid of NVivo. Results were presented using tables, figures and quotes/excerpts for the qualitative part. The results pinpointed a range of crucial problems for personnel with Concern Worldwide, showing a necessity for a better support system and workplace setting. Number one is the fact that the shortage of domestic psychological support services is raised as a key issue by workers during induction. The findings emphasize the importance of comprehensive induction programs. Effective expatriate induction training, cultural integration initiatives, safety procedure inductions, and administrative support are all critical components that contribute to the successful performance of expatriates in their respective roles. These results underscore the necessity for organizations to invest in well-structured induction programs to ensure their expatriates are well-prepared and supported. The study provides valuable insights into the impact of induction programs on expatriate performance, and assert that there are several limitations that should be acknowledged including, the study's sample size and scope being limited to 150 expatriates and just being specific organizations with different working environment within the regions, which in one way or the other may affect the generalizability of the findings. The study suggested a Future research to include a more diverse and larger sample to validate and extend the findings across different contexts and industries
- ItemModerating effect of balance of payment position on the drivers of exchange rate volatility in Kenya(Strathmore University, 2024) Kirianki, L.The volatility of exchange rates is the source of exchange rate risk and has certain implications on the volume of international trade. Exchange rates influence decisions made by individuals, governments, and businesses. Collectively, this affects economic activity, inflation, and the balance of payments. The study sought to establish the effects of market sentiment, information asymmetry, and economic cycles on exchange rate volatility in Kenya, moderated by the balance payment position. The study was supported by the Purchasing Power Parity Theory. It applied a positivist research philosophy while its research design was correlational. Secondary data on the research variables was collected from the Central Bank of Kenya and Bloomberg for ten years between 2014 and 2023 using monthly data a total of 120 observations. This study used EViews12 to conduct descriptive and inferential statistical analysis. According to the findings of the study, Balance of payment was significant as a moderating variable for all the equations and reduced the effect of the independent variable on the dependent variable thus strengthening the Kenya shilling. All regression models indicate that the dependent variable of exchange rates was significantly affected by information asymmetry, economic cycles, and balance of payment. Inflation was introduced as a control variable and was found to be significant in all models. The study adds to the existing body of knowledge on drivers of exchange rate volatility by providing fresh insights through the focus on the moderating effect of balance of payments. Additionally, the interactions amongst market sentiment, information asymmetry, and economic cycles in one single study are unique in terms of their influence on exchange rate volatility, thereby offering useful references to scholars, professionals, and researchers. The study recommended that the Government needs to come up measures to reduced information asymmetry in the economy and find solution to high net imports by encouraging import substitution. These policies should be cognisant of underlying factors such as information asymmetry, economic cycles, and even balance of payments. Key Terms: Balance of Trade Position, Economic Cycles, Information Asymmetry.
- ItemModerating effects of institutional ownership on determinants of cash holdings of non-financial firms listed on Nairobi Securities Exchange(Strathmore University, 2024) Ongwae, J. K.Cash is very crucial for businesses, impacting liquidity, operational flexibility, and strategic decision-making. This study investigates the moderating effects of institutional ownership on determinants of cash holdings in non-financial firms listed on the Nairobi Securities Exchange (NSE), factoring the unprecedented challenges posed by the COVID-19 pandemic. The pandemic has significantly altered the economic landscape, prompting firms to reassess their cash management strategies. The objectives of the study were; to establish the effect of profitability on cash holding of non-financial firms listed on the NSE, to establish the effect of firm size on cash holding of non-financial firms listed on the NSE, to establish the effect of board size on cash holdings of non-financial firms listed on the NSE, to establish the effect of board gender on cash holdings of non-financial firms listed on the NSE, to establish the effect of growth opportunities on cash holdings of non-financial firms listed on the NSE, to establish the effect of dividend payment on cash holdings of non-financial firms listed on the NSE, to determine the moderating effect of institutional ownership on cash holding and the determinants on non-financial firms listed on the NSE. The study used shiftability theory, trade off theory, pecking order and agency theory. The research design used in this study was longitudinal. For the period 2011-2022, a population of 44 non-financial firms listed on the Nairobi Securities Exchange was conducted. Out of the 44 firms, the research managed to get data for 31 firms. The population of the study comprised of agricultural, commercial and services, automobile and accessories, construction and allied, energy and petroleum, investment and services, manufacturing, and real estate investment trusts. Secondary data was derived from yearly reports and financial statements. The methodology applied was Arellano bond dynamic panel data model to test determinants of cash holding using shiftability, the trade off, pecking order and agency theories. The study found firm size had a negative significant relationship with cash holdings that was consistent with shiftability theory while profitability, board size, growth opportunities had a positive significant relationship that were consistent with pecking order, agency, and trade off theory. The study recommends guidelines to be set for different size firms as one-size-fits-all policies may not be suitable, and larger firms might have different liquidity needs compared to smaller ones. The study also recommends enforcement of disclosure requirements that mandate companies to report on the influence of institutional ownership on financial decisions, including cash management.
- ItemPerceived effectiveness of anti-money laundering preventive measures in reducing incidences of money laundering through commercial banks in Kenya(Strathmore University, 2024) Oyoo, J.Many legislative and institutional efforts have been directed at countering money laundering for over thirty years but there are several accounts of money laundering cases still being reported worldwide. Banks are important in combating money laundering. They have been heavily penalized for violating Anti-Money Laundering (AML) regulations and, in some instances, for their controls failing to prevent money laundering. The above raises the question of whether the underlying problem is just a violation of policies and regulations or whether the existing AML system is flawed. Given the above, the study assessed the perceived effectiveness of AML preventive measures as applied by commercial banks in Kenya to reduce the likelihood of money laundering. The specific objectives were to determine whether customer due diligence measures and the ongoing monitoring of transactions using digital systems by commercial banks as required by the applicable law are effective in reducing money laundering incidences. The study assessed how the corporate culture of commercial banks in Kenya affects compliance with the AML preventive measures which in turn affects the measures’ effectiveness in reducing incidences of money laundering. The theory of the crying wolf and the fraud diamond theory were applied in the study. The research philosophy adopted for the study was the positivist research philosophy. Questionnaires were administered to obtain primary data. The questionnaires were distributed to 76 respondents drawn from 38 commercial banks registered by the Central Bank of Kenya as of 31 December 2022. 64 responses were received translating to an 84% response rate. Two respondents which included account opening officers and compliance officers were selected from each bank. Descriptive and inferential statistics were applied to analyze the data. In addition, reliability and diagnostic tests were first conducted before inferential statistics analysis. Multiple regression analysis was used to analyze the data. The results showed that the AML preventive measures which comprised client due diligence and ongoing monitoring of transactions and corporate culture had a positive and statistically significant effect on the reduction of incidences of money laundering in commercial banks. From the findings of the study, it was noted that employees play a big role in the implementation and compliance with AML requirements. Therefore, commercial banks should continuously train and update their staff on money laundering trends to improve their efforts in reducing money laundering cases. Further, although CDD, ongoing monitoring and corporate culture are important individually, their applicability and assessment should be done holistically. Therefore, the study recommends the regulator and banks ensure that policies, resources, and efforts are directed at all three measures concurrently. Also, due to limitation of time, the study did not include the updates to the POCAMLA (2009) and POCAMLAR (2013) which were done during the study. Therefore, future studies should consider looking into the impact of the update on regulations in the implementation and effectiveness of AML measures.
- ItemSignificance of the Auditor General forensic audit reports on effective investigation of corruption cases in Kenya(Strathmore University, 2024) Nyakundi, A. N.In Kenya, despite the presence of functional Anti-corruption institutions, the investigation and successful prosecution of corruption cases has been a challenge with most cases being dropped at the Judiciary for lack of sufficient evidence. This could be due to lack of comprehensiveness of forensic audit reports, interference with the independence of the auditor and usage of confidentiality to limit audit investigation. Therefore, this study was motivated to examine the significance the forensic audit reports from the Office of the Auditor General have towards effective investigation of corruption cases in Kenya. This was guided by three specific objectives, the first one was to establish the effect of forensic audit reports’ comprehensiveness and audit clarity on effective investigation of corruption cases in Kenya. The second specific objective was to establish the effect of access to Government Commercial in Confidence contracts on effective investigation of corruption cases in Kenya. The final specific objective was to establish the effect of the independence of the Office of the Auditor General on effective investigation of corruption cases in Kenya. The fraud management lifecycle theory, public choice theory, and fraud pentagon theory formed the theoretical framework of the study. Primary data, for analysis was collected by using structured questionnaires from 95 respondents that had been sampled from a target population of 125 respondents. They comprised of 9 investigation staff officers from the Ethics and Anti-Corruption Commission sampled from a target population of 12 respondents, 9 staff officers from the Office of the Director of Public Prosecutions sampled from a target population of 12 respondents and 77 forensic auditing staff from the OAG Office with a target population of 101 respondents. Descriptive, Pearson correlation and multiple linear regression models were employed for analysis. The regression analysis results were able to note that comprehensiveness and audit clarity in forensic audit reports is a factor that can significantly lead to effective investigation of corruption cases in Kenya. The results also observed that limited access to Government Commercial in Confidence Contracts decreases effective investigation of corruption cases in Kenya. The findings also observed that the independence of the Office of the Auditor General to utilize forensic auditing significantly increases effectiveness in investigation of corruption cases in Kenya. The study concluded that forensic audit report from the OAG should be comprehensive and clear enough to be valuable towards the efficiency of concluding subsequent investigations by other agencies on a matter. It also concludes that limited access to Government Commercial in Confidence Contracts decreases effective investigation of corruption cases in Kenya. Government Commercial in confidence outsourced contracts should be scrutinized by the OAG forensic auditing unit whenever any malpractice is suspected to establish transparency. Finally, the study concluded that, when the Office of the Auditor General is fully independent to use forensic auditing effectively, then its reports would improve effective investigation and prosecution of corruption cases. Keywords: Forensic Audit Report, Investigation, Prosecution, Corruption, Office of the Auditor General, Government Commercial in Confidence Contracts, Independence
- ItemThe Effect of corporate parent roles on the operational performance of subsidiaries in international NGO`s in Kenya(Strathmore University, 2024) Rao, E.The not-for-profit sector has been rapidly growing in Africa and around the world playing a leading role in improved livelihoods and poverty alleviation. Through their work with multiple stakeholders across various geographic areas, organisations in the NGO sector come across challenges that necessitate the adoption of a decentralised structure including the need for operational performance and optimal service delivery. There is however lack of clarity on what drives the decentralisation including which functions ought to be decentralised and the impacts of decentralisation on the organisation’s performance. Additionally, there exist staff disagreements between the home and field office staff that could potentially impede the organisations work and deter responsiveness to partners and community concerns. Corporate parent roles arise because of the need to strengthen the decentralised entities, realize synergistic benefits and align the vision across the organisation. The value addition efforts have been seen to be challenging but essential for an improved business strategic position with effects that both improve or destroy value. This study sought to establish the effect of corporate parent roles (Portfolio manager, Synergy manager and the Parental developer) on the operational performance of subsidiaries in international NGO`S in Kenya. The systems theory and agency theory were used to anchor this study. A descriptive research design technique was employed and by use of a questionnaire, responses from 270 respondents in the 30 leading INGO`s by spend in Kenya were considered. The data that was collected was then analysed using correlation and regression analysis and descriptive statistics, to determine the relationship between the study variables to draw conclusions of the study. The results showed that the portfolio manager role, the synergy manager role and the parental developer role all have a significant positive influence on operational performance of INGO subsidiaries in Kenya. This study contributes to the policy formulation and operational structures of INGO`s. It also provides tools and techniques for practicing managers therefore enriching the Systems theory. The findings of this study were however limited to the Kenyan, INGO context and focused on corporate parent roles, limitations that future research should address.
- ItemThe Effect of corporate restructuring on employee performance: a case of the NCBA merger(Strathmore University, 2024) Makau, C.Companies are implementing restructuring strategies to enhance their competitive position and boost shareholders' wealth in response to heightened competition and evolving operational conditions. Research has demonstrated that corporate restructuring not only improves financial performance but also enhances employee performance in terms of productivity, efficiency, effectiveness, and the creation of a positive customer experience. Corporate restructuring significantly improves performance, particularly in highly competitive areas, by increasing employee productivity and their contribution to corporate success. This could elucidate the reason behind NCBA's investment in employee learning hours experiencing a significant surge of 300% by 2022, subsequent to the initiation of its restructuring process. Hence, this study has a strong focus on examining the impact of corporate restructuring on employee performance, specifically in the context of the merger between NIC and CBA Banks. The study's specific objectives centred on examining the impact of cost restructuring, governance reformation, and downsizing on the employee performance of NCBA Bank. NCBA bank has a total of 42 branches in Nairobi. The focus of the analysis was on the employees, specifically the departmental managers. Given that each branch consists of six (6) departments, a total of six (9) departmental managers were examined in the firm. Therefore, the study's target population consisted of a total of 252 respondents. A total of 190 respondents were selected at random to compose the sample design for the study. Data collection from the appropriate respondents at the bank was conducted using structured questionnaires that contained closed-ended questions. The analysis involved the utilization of multiple linear regression in the SPSS software. The researcher ensured the participants' privacy and confidentiality, as well as the secure sharing of any sensitive data. The regression analysis revealed that implementing cost restructuring has a positive impact on employee performance in the merger between NIC and CBA banks. As a result of cost restructuring, which included reducing indirect costs, bringing in-house activities instead of outsourcing, and cutting operational costs after the merger, employees became highly productive, creative, efficient, quick learners, and self-driven. The findings also indicated that implementing governance reforms enhances employee performance in the merger between NIC and CBA banks. Consequently, the reformation of governance, which involved altering the top management, restructuring the management hierarchy, and modifying the remuneration system for top executives, resulted in employees displaying high levels of productivity, creativity, efficiency, adaptability, and self-motivation. The research discovered that downsizing enhances employee performance in the merger between NIC and CBA banks. As a result of downsizing during the merger, which involved reducing bank departments and the number of supervisors per managerial unit, employees became highly productive, creative, efficient and self-driven.
- ItemThe Effect of enterprise risk management practices on the organizational performance of non-financial firms listed on the Nairobi Securities Exchange: the moderating role of firm characteristics(Strathmore University, 2024) Robert, H. M.In the context of the dynamic corporate environment, where successful economic performance and value creation are paramount objectives, this study investigated the effect of ERM practices on the organizational performance of listed non-financial firms in the NSE, with an exploration of how firm characteristics moderate this relationship. Through a mixed-method approach using both primary and secondary data sources, the study aimed to establish the relationship between ERM practices (risk culture, risk identification and governance, risk assessment mitigation, and control) and organizational performance, determine the impact of firm characteristics on this relationship, and explore management perceptions regarding the relationship between ERM practices and organizational performance. Secondary data was collected from the financial statements of all the 39 listed non-financial firms. Primary data was collected through the issue of questionnaires to 114 CEOs, CFOs and CROs. Objective one entailed the analysis of data using descriptive statistics and Structural Equation Modeling (SEM) in the R statistical programming language to unveil structural linkages. The structural model assessment revealed a significant (p < 0.05) relationship between ERM and its eight components, except for objective setting and information & communication (p > 0.05). Furthermore, a positive correlation was identified between ERM and organizational performance. The correlation matrix indicated that all eight ERM components exhibited a positive correlation with organizational performance. For objective two, a multiple regression analysis determined a direct impact of ERM practices on organizational performance. Additionally, the analysis indicated a positive influence of firm characteristics on organizational performance, albeit statistically insignificant. For objective three, the management concurred with the regression analysis, acknowledging the impact of ERM practices on organizational performance. They perceived a risk-focused culture as a primary motivator for ERM adoption, with unsupportive cultures identified as barriers. One key limitation of the study was the use of composite score to measure organizational performance. Future research could benefit from examining the direct impact of ERM practices on the four perspectives of the Balanced Scorecard (BSC): Financial, Customer, Internal Business Processes, and Learning & Growth. Overall, the study enhances understanding of how ERM practices contributes to improved organizational performance and informs future research directions in this area.
- ItemThe Effect of fraud management strategies on the non-financial performance of microfinance banks in Nairobi County, Kenya(Strathmore University, 2024) Wamboi, L. A.Over the past decade, microfinance banks (MFBs) in Kenya have experienced a significant increase in the number and value of fraud cases, which has negatively impacted their performance. Despite various strategies and measures implemented to combat fraud, its incidence and effects continue to rise as fraudsters develop new methods. This study aims to assess the impact of fraud management strategies on the performance of MFBs in Kenya. Specifically, the study seeks to determine the effects of fraud risk deterrence, fraud risk prevention, fraud risk detection, and fraud risk mitigation on the non-financial performance of MFBs in Kenya. The study is grounded in the Fraud Triangle Theory, the Theory of Differential Association, the Fraud Diamond Theory, and Institutional Theory. A positivist approach was adopted, employing a descriptive research design. The population consisted of the 13 licensed microfinance banks in Kenya, targeting 316 permanent employees in senior and middle management positions within each MFB as the unit of observation. Data was collected using a questionnaire administered via a Google link sent to each respondent. Analysis was performed using SPSS software, employing both descriptive statistics, such as frequency distributions, and inferential statistics. The findings were presented in tables and graphical formats, such as bar graphs and pie charts, for ease of interpretation. The research revealed that non-financial performance was supported by the adoption of various effective fraud deterrence strategies by MFBs, including the use of fraud detection tools, preventive and control measures, and fraud investigation and detection practices. Additionally, fraud prevention strategies, such as frequent risk monitoring and employee training in fraud risk management, have been relatively successful. However, there is a need for greater clarity regarding whether these fraud risk prevention strategies are stringent enough to enhance non-financial performance. Many MFBs have not yet effectively institutionalized financial accountability through audit efficiency and fraud detection strategies. The study recommends that MFBs enhance fraud risk deterrence by instituting punitive penalties for employees caught engaging in fraud and identifying the appropriate tools for implementation. Furthermore, obtaining the cooperation of other departments is crucial for effective fraud risk deterrence.
- ItemThe Effect of intellectual capital on financial performance of listed firms in Kenya: the moderating role of firm size(Strathmore University, 2024) Kiminda, C. N.The Nairobi Securities Exchange (NSE) plays a crucial role as a platform for capital raising and investment facilitation within Kenya's dynamic economy. Despite this, many firms listed on the NSE struggle with inadequate financial performance. This research aimed to explore the relationship linking intellectual capital to the financial performance of NSE-listed firms in Kenya, focusing on the prevalent issue of underperformance. Additionally, it investigated how firm size moderates this relationship. The study was based on three theoretical frameworks: The Resource-Based View theory, Social Capital Theory, and Dynamics Capabilities Theory, within a positivist philosophical stance. Both primary and secondary data were analyzed, with primary data being collected using structured questionnaires. The study followed a descriptive and cross-sectional research design, descriptive and inferential statistics were used to analyze the data. Correlation and multiple linear regression, were used to establish variations and associations between the variables. The study established that human capital has a positive relationship with financial performance of NSE listed firms. This was shown by the regression and correlation results which support the results as there existed a positive relation between human capital and ROA. The findings on structural capital and relational capital and financial performance similarly yielded a positive result establishing a positive relationship between structural capital and ROA and a positive relation between relational capital and ROA return on assets. The combined effect of intellectual capital positively affects financial performance measured in ROA.