Abstract: This study examined the effect of executive compensation on financial performance among listed commercial banks in Kenya. The study adopted descriptive research design. The target population comprised of the eleven commercial banks listed at the Nairobi securities exchange as at December 2017 as indicated in CMA bulletin 2017. The study employed secondary data extracted from audited financial statements and annual reports of individual listed commercial banks over the 6-year period, 2012 to 2017. STATA was used to tabulate and analyze the data. Percentages, means and frequency distribution tables were used to describe the data. Relationships between the independent and dependent variables were established by means of regression. The study established that executive annual bonuses, executive fixed salaries, executive allowances had a positive effect on financial performance of listed commercial banks while executive share ownership had a negative effect on the financial performance of the listed commercial banks in Kenya. However, the effect of all the four independent variables including; annual bonuses, executive fixed salaries, executive allowances and executive share ownership did not show statistically significant influence on financial performance of listed commercial banks in Kenya. The study thus concludes that executive compensation does not have a significant influence on financial performance listed commercial banks in Kenya. The study recommends that top management of listed commercial banks in Kenya should improve on executive compensation even though it may not improve financial performance that much.
Keywords: Executive Compensation, Financial Performance, Listed banks.
Title: Effect of Executive Compensation on the Financial Performance of Listed Commercial Banks in Kenya
Author: Muriuki Samuel Mung’ora, Dr. Peter Wang’ombe Kariuki
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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