MCOM Theses and Dissertations (2011)

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    Corporate governance practices of Kenyan insurance broking firms
    (Strathmore University, 2011-06) Kimang'a, Lazaro Akunga
    Governance applies to all sectors of the corporate and institutional world. This study looks specifically at some governance practices of Kenyan insurance braking firms and their relation to performance. In particular, the study examines the impact of board characteristics of Kenyan insurance broking firms on company financial performance. Kenyan insurance braking firms are small cap companies. Many studies have examined governance practices of large companies, particularly those quoted on the stock exchange as well as those in the banking sector. There is evidence that well governed firms perform better. This study had three main objectives. First to assess the degree to which insurance braking firms in Kenya have adopted and implemented international governance guidelines both in theory and practice. Secondly, to determine whether Kenyan insurance broking firms with some corporate shareholders have performed better than broking firms owned by individuals. Thirdly, to assess the impact of adopting and implementing global board governance guidelines, in particular those related to the board of directors. in the insurance broking sector in Kenya. on firm performance. In this latter regard, the study sought to determine the impact/importance of several key board characteristics in respect of board size, board composition, the Chairman-CEO duality role and the existence of an audit committee on performance in the Kenyan insurance broking sector. Findings revealed that the general level of implementation of international governance guidelines in the Kenyan insurance braking sector was not strong. Furthermore. there was no significant statistical evidence that Kenyan insurance broking firms with corporate shareholders have performed better financially than broking firms without such linkages. As for the third objective, data did not provide adequate statistical evidence to reach conclusions about the relationship between corporate governance practices and firm performance. These findings support findings of earlier studies elsewhere. The study revealed an overall weakness in many Kenyan insurance braking firms in embracing governance guidelines and therefore further studies needed to be undertaken to reveal more about governance issues in the Kenyan insurance broking sector.
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    The effect of enterprise risk management implementation on the value of companies listed in the Nairobi Stock Exchange
    (2013-11-14) Kisaka, Eric S.
    This study assesses the level of implementation of Enterprise Risk Management (ERM) in companies listed in the Nairobi Stock Exchange. The study also seeks to test the significance of factors affecting this level of ERM implementation and to investigate whether the level of ERM implementation has a positive effect to the value of companies as measured by Tobin's Q. Data for this study was collected from a sample of 22 companies listed on the Nairobi Stock Exchange (NSE) for the periods ended December 2009. A quantitative research design was used and the key variables of interest were the level of ERM implementation and the value of the companies (as measured by Tobin's Q). The research findings show that most of the organizations sampled (82%) viewed ERM implementation as a strategic business initiative as compared to a compliance requirement. The study also found that 50% of the organizations sampled measured the value of their ERM activities to the organization through its level of earnings volatility reduction. Thirty six percent of the respondent companies did not have an ERM framework in place but had a plan to introduce one in the short-term. However, 27% of the respondent companies had a well formulated ERM framework across the business and it was fully implemented. Forty five percent of the respondents indicated that ERM implementation in their companies was championed by a Chief Risk Officer lRisk Champion while 36% indicated that this implementation is championed by the head of internal Audit. The study also finds that there is a significant relationship between the appointment of a Chief Risk Officer and the level of Enterprise Risk Management Implementation in companies. However, it does not find a significant relationship between the level of ERM implementation and the following variables; industry of operation, level of board independence, size of the firm and growth rate of the firm Lastly, consistent with prior research, this study finds a significant relationship between a company's level or Enterprise risk Management Implementation On and the company's value. The results of this study show that an increase in the level of ERM implementation in companies had a positive contribution to the value of the companies. The limitations to this study included the subjective information that was collected to determine the level of ERM implementation in the companies listed on the Nairobi stock exchange. This subjectivity was partly reduced by interviewing the Chief Risk Officer or in their absence, the Chief Internal Auditor of these companies since their understanding of general risk management concepts and practices in their institutions is considered to be at a higher level than the rest of the staff in the organization. Other than that, the Nairobi Stock only has 47 companies listed. Only 22 of these companies responded to the research questionnaire. The low response might result in the findings being unique to the small sample only thus not representing the entire population.
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    An examination of the capital structure decisions by companies quoted on the Dar es Salaam Stock Exchange.
    (2013-11-13) Kumalija, Jacob; Koshal, Jeremiah Ole; Wangombe, David; Kiraka, Ruth
    This study was carried out in Tanzania. The study was intended to examine the levels of debt and equity employed by companies quoted on the Dar es Salaam Stock Exchange (OSE) in financing their businesses. The study also aimed at identifying the significant factors that influence the capital structure and further to examine the financial managers' opinions on the factors they perceive important in influencing the capital structure. The study focused on 9 selected non-financial companies quoted on the (OSE). The data was collected for 10 years beginning 2000 to 2009 and was obtained from the companies' financial reports and from questionnaires that were mailed to the (CFOs) of all the 9 companies. The most important theories that have guided this study are pecking order theory, agency cost theory and trade-off theory. By using descriptive analysis, it has been found that companies quoted on the (OSE) are on average moderately levered as they prefer relatively more equity to debt. By using regression analysis, the empirical results show that the significant factors influencing the capital structure of companies quoted on the (OSE) are; industry class, company profitability, company size, non-debt tax shields and growth opportunities. Contrary to the outcome of prior studies in developing countries, this study finds that asset tangibility, earnings volatility and effective tax rate are positively related with capital structure. The results of regression are consistent with the opinions of the CFOs except for assets tangibility, earnings volatility and effective tax rate which are perceived by (CFOs) as important factors while the regression analysis shows them as not influential factors on capital structure by companies quoted on the (OSE)The possible explanation for these differences may be that company officials perceive some of the factors as important while in reality they are not. This study makes several contributions to the body of knowledge as well as providing insights to academicians. The study further reveals that there is no single theory that simultaneously predicts the full set of the reliable factors; this warrants further development of the capital structure theories. Finally, the researcher concludes that capital structure decisions varies from country to country and even from industry to industry and should be dealt as such.
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    Determining the venture capital investment framework for MSMEs: the perspectice from venture capital funds in Kenya
    (Strathmore University, 2012) Kamau, Juliana
    The purpose of this study was to develop the venture capital (VC) investment framework for micro, small and medium enterprises (MSMEs) in Kenya. The study extended previous works done on the venture capital investment process (VCIP) from other countries to the Kenyan context. The researcher collected data in 2010 through in-depth interviews and secondary sources from seven venture capital funds (VCFs). Data were presented and analyzed using cross case matrices, figures and content analysis. The study examined the three phases of the investment process: pre-investment, investment and post-investment phases. The study explained how VCFs made their investment decisions from when they generated a deal with an MSME until the time they exited from the deal. The key results showed the differences found in the VCIP in Kenya. The results indicated that MSMEs in Kenya received more benefits at the pre-investment phase. One noted benefit was that VCFs assisted entrepreneurs to prepare business plans. VCFs also educated entrepreneurs on the VCIP thus committed more resources in the pre-investment phase. The results also showed that micro enterprises did not receive VC because of the risks involved. This was a key result because the expectation was that VC was essentially for micro enterprises. However, market and industry data on micro enterprises were often either inadequate or unavailable thus making it difficult for VCFs to make decisions on investment opportunities and increasing investment risks. The results also suggested that lack of VC associations, local VCFs and inadequate support from the Kenyan government increased the challenges faced by VCFs that attempted to invest in MSMEs in Kenya.Areas for further research include a study on the entrepreneurs’ perspective, to suggest ways to improve the VCIP. Further study is also required on why local investors have not established VCFs in Kenya. A comparative study on the success of those MSMEs financed by debt capital versus those MSMEs financed by VC could also be conducted.
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    Working Capital Management Efficiency: an empirical Survey on Tanzanian Universities
    (Strathmore University, 2011) Lemeri, Mary F.
    Efficient working capital management is one of the pre-conditions for the continued existence of organizations. This study examined the efficiency of working capital management (WCM) in Tanzanian universities. A sample of 8 out of 31 universities in Tanzania for a period from year 2005 to 2009 was studied. To measure the efficiency of WCM, three index values namely performance, utilization, and efficiency indices were computed. Different variables affecting WCM efficiency including return on assets (ROA), earnings before interest and tax (EBIT), number of computers and computer software were studied. Further, university sizes, growth in number of students, and type of university (Government or Private) were used as control variables. The data were analyzed using descriptive statistics, Pearson's correlation and regression. The findings of the study indicate that Tanzanian universities have managed their working capital satisfactorily. The result shows that there is a positive relationship between WCM efficiency and university's earnings. This means that the higher the earnings, the greater the measure of efficiency in working capital management. The study also found a positive relationship between number of computers and working capital management efficiency. It implies that an increase in number of computers with proportion to the number of finance staff lead to the efficiency in WCM.