Corporate governance practices of Kenyan insurance broking firms
Kimang'a, Lazaro Akunga
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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.