Abstract: Corporate Governance among companies in Kenya has often been associated with the financing behaviour of the firms. Efforts to revive the ailing and liquidating companies have focused on financial restructuring. A great dilemma for management and investors alike is whether there exists good Corporate Governance (CG) and how various corporate governance principles influence financial performance. Despite the tight regulatory framework, Corporate Governance continues to be weak in Kenya this has led to many companies being characterized by scandals. While most firms listed on the Nairobi Securities Exchange (NSE) have improved in performance, agricultural firms have experienced declining fortunes and some have even been delisted from the NSE over the last decade. Financial and governance problems have been experienced by the companies to an extent that they have been put under statutory management. This has resulted to occasional loss of stakeholders ‘wealth and the overall investors’ confidence’ in the NSE. In spite of the support from the government of Kenya, the agricultural sector has continued to face enormous challenges in with many companies in the sector closing down. This study therefore investigated the Influence of Corporate Governance on Performance of Agricultural Firms listed on NSE. The specific objectives were: to determine the influence of disclosure of accounting and financial reporting systems, influence of institutional shareholding ratio and to determine the moderating effect of government policies and regulations on financial performance of agricultural firms listed on the NSE. The population was all the 7 agricultural firms listed on the NSE for the period of 7 years. Survey design was used in this research. After stratifying the target population using seven departments, 98 respondents were selected using census sampling technique. At each agricultural firm a sample of 14 respondents was selected to represent the entire entity. The study used questionnaire to gather data. To enhance validity, the researcher exposed the instruments to experts for judgment. To assess the reliability of instruments, the test re-test technique was used on participants during the pilot study. The SPSS version 21 was used to analyse questionnaires. The study found that institutional share ratio, debtor’s management and disclosure of accounting and financial reporting system have a positive and significant influence on financial performance. Therefore, it was concluded that corporate governance has significant influence on performance of agricultural firms listed on Nairobi Securities Exchange. It was also concluded that government policies and regulations have significant effect on the influence of corporate governance on financial performance. The study recommended that listed firm at NSE should consider their corporate government practices especially disclosure of accounting and financial reporting system and CMA should enact stringent rules and regulations to ensure that listed firms uphold good corporate governance practices.
Keywords: Corporate Governance, Financial Performance.
Title: Influence of Corporate Governance on Financial Performance of Agricultural Firms Listed on Nairobi Securities Exchange
Author: Dickson Malanga Shikanga, Dr. Clive Mukanzi, Dr. Douglas Musiega
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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