Corporate governance and financial and non-financial performance of state-owned enterprises in Kenya
Date
2022
Authors
Abang'a, A. O.
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
State-owned enterprises (SOEs) have social and economic objectives whose achievement depends on good corporate governance. As a result, this thesis sought to determine the relationship between corporate governance and financial and non-financial performance of SOEs in Kenya. Multi-theoretical framework is adopted to understand the extent to which corporate governance (CG) provisions, such as board meetings, gender diversity, board skill, board sub-committees, board size, board independence, board chair age and combined corporate governance provisions (CCG) influence financial and non-financial performance of SOEs in Kenya. Explanatory sequential mixed-methods approach was applied in which secondary data was first obtained from the annual financial reports and analyzed using balanced panel data, fixed-effects regression. The result indicates that board meetings, board skill and board gender diversity are the only significant CG provisions in determining financial performance. The result also finds that board skill and CCG are the only CG provisions that determines SOEs non-financial performance. In the second phase, responses of questionnaire survey obtained from the audit committee chairpersons of SOEs in Kenya were analyzed using independent sample t-tests. The results revealed that board skill is the only significant variable that positively influence both financial and non-financial performance. Interviews to SOEs directors unearthed the politicization of board appointments in Kenya. Overall, the findings demonstrate that CG reforms have improved performance, however, some CG provisions require re-considerations in order to attain full potential. The findings of this study have theoretical, practical and policy implications. The results advocate for the multi-theoretical framework in studying the relationship between CG provisions and financial and non-financial performance. State Corporation Advisory Committee, the Office of the Auditor General and the National Treasury that are mandated to overseeing the operations of SOEs in Kenya are called upon to re-evaluate the governance of SOEs to improve their performance. Also, the academic community are encouraged to approach CG studies in SOEs using mix-method approach to gain better understanding of the complex relationships devoid in a single approach. The study makes six important contributions. First, the study contributes by confirming that individual provisions of CG that constitute CCG provision have different impact on performance; Second, study adds to relatively few available literature on CG in SOEs ; Third, the study responds to a call for more CG studies in a developing country context; Fourth, this study shows the link between CG provisions and financial and non-financial performance of SOEs in a single study; Fifth, through mixed-methods research approach, this study uncovered important governance challenges that may have not been possible in purely quantitative analysis. Finally, by showing that CG studies should be approached from multi-theoretical framework. This study is limited by the fact that equal weight in binary coding is used, focus was on disclosures in annual financial reports, impact of moderator and mediating variables were not examined, qualitative data inquiry involved limited number of interviewees and single framework of non-financial performance. Future research may consider assigning weight, consider other information sources like websites, establish the impact of moderator and mediating variables, study other developing countries over time, include more interviewees and use broader measure of non-financial performance.
Description
Full - text thesis
Keywords
Citation
Abang’a, A. O. (2022). Corporate governance and financial and non-financial performance of state-owned enterprises in Kenya [Strathmore University]. http://hdl.handle.net/11071/15400