Business Administration

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Browsing Business Administration by Subject "Corporate governance"

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    Effect of corporate board structure on the value of financial firms listed at the Nairobi securities exchange, Kenya
    (Chuka University, 2025-11-10) Njoka, Eva Gatune
    As global best practices continue to emphasize the importance of sound governance, there is a growing need to understand how the structure of corporate boards affects the value of financial firms in the Kenyan context. This study sought to explore the relationship between board structure and firm value among financial firms listed on the NSE. The specific objectives of this study were to establish the effect of board size, board independence and board remuneration on the value of financial firms listed at NSE and to evaluate the moderating effect of firm size on the relationship between board structure and the value of financial firms listed at NSE. This study was based on Agency Theory, Stakeholders’ Theory and Stewardship Theory. A descriptive cross-sectional research design was adopted. A census technique was conducted to collect data from all the 22 listed financial firms for a 5 year period from 2020 to 2024. The study relied only on secondary data, collected from the annual financial reports of the financial firms. Data was analyzed using descriptive and inferential statistics. Microsoft Excel and SPSS version 28.0 were used to code and analyze the raw data collected. Diagnostic tests were carried out to test the regression assumption. Multiple regression analysis was used to establish the relationship between variables, and t-statistic at 5% significance level was employed to test the hypotheses. The findings of the study revealed that board size (B = 0.002, P=0.602>0.05) and board independence (B = -0.002, P=0.647>0.05) have no statistically significant effect on firm value, as their p-values are well above the 0.05 threshold. This suggested that simply increasing the number of board members or having more independent directors does not necessarily translate into higher firm value. However, board remuneration (B =0.073, P=0.000<0.05) was positive and highly significant, meaning that compensating directors adequately had a strong and positive influence on firm value. This implied that rewarding board members aligns their interests with those of shareholders, motivating them to commit more effort, skills, and oversight to enhance firm performance. The results suggest that in firms listed at the NSE, the financial incentives provided to board members are more impactful in driving firm value compared to board size or independence. This could be explained by the idea that remuneration serves as a tangible motivator, encouraging directors to act diligently in advancing firm goals, whereas board size and independence may not automatically translate into effective governance unless coupled with accountability mechanisms. The study recommended that Regulators should also avoid rigid prescriptions on board size and instead encourage firms to adopt sizes that best match their operational complexity and strategic needs. The study findings are expected to add to the academic field by laying a foundation for further research on board structure and firm’s value. The study is expected to benefit regulators and policymakers, such as the Capital Markets Authority (CMA) and the Central Bank of Kenya (CBK), by highlighting areas that require stronger governance frameworks to enhance market stability and investor confidence.
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    Effect of internal control systems on quality of financial reports of non-deposit taking SACCOS in Tharaka Nithi county, Kenya
    (Chuka University, 2024) Muendo Kavwele Alfred
    The quality of financial reports of Savings and Credit Co-operatives (SACCOs) has been poor and declining in the past few years as evidenced by Tharaka Nithi Cooperative Audit Status Report 2022. To avoid this trend, SACCOs have focused on application of computerized systems to induce innovations and enhance the quality of reports and operations. The main objective of the study was to determine the effect of internal control systems on the quality of financial reports of non-deposit taking SACCOs in Tharaka Nithi County, Kenya. The specific objectives of the study were to determine the effect of control environment, control activities, risk assessment, information and communication and monitoring on quality of financial reports of nondeposit taking SACCOs. A census was taken of all the 35 non-deposits taking SACCOs that are incorporated and are headquartered and carry out their operations in the County. The study was anchored on agency theory, attribution theory and stewardship theory. The study used a structured questionnaire for data collection. Data was analyzed using both descriptive and inferential statistics with the help of Statistical Package for Social Sciences (SPSS) version 25.0. The hypotheses of the study were tested using t- test while the overall significance of the model was tested using F- Ratios at 5% level of significance. Multiple regression analysis was used to analyze the relationship between the variables in the study. Control environment has a regression coefficient (-0.721, P-value=0.006) implying that control environment has a negative statistically significant effect on quality of financial reports. Control activities have a positive statistically significant effect on financial report quality with a regression coefficient, which is (1.039, P-value=0.005). Risk assessment has a regression coefficient (0.703, P-value=0.035) implying that risk assessment has a positive statistically significant effect on quality of financial reports. Information and communication have a regression coefficient (0.817, P-value=0.000) implying that information and communication has a positive statistically significant effect on quality of financial reports. There was potentially insignificant moderation between internal control systems and competence of the board of directors with a regression coefficient of -0.659 and a p-value of 0.228>0.05. Findings from the study are expected to help determine the effect of internal control systems on quality of financial reports of SACCOs in Tharaka Nithi County. The study will help the SACCOs management understand the importance of having good internal controls that ensure quality financial records and report. This study will be of benefit to researchers since it will add to existing knowledge. The study recommends that firms should adopt proper control activities, develop risk identification, risk evaluation, risk response and risk program analysis strategies and ensure clear communication of information in order to improve the quality of financial reports.