Role of corporate governance and strategic leadership practices in mitigating risks in stock brokerage firms in Nairobi
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The success or failure of any organization rests on its leadership. In the 21st century, corporate governance is becoming a matter of enormous public attention and concern. The increase in investors’ interests in the way stock brokerage firms are led, changes in the institutional framework and policies and demand for ethical leadership from stakeholders have contributed significantly to renewed interest in the way these firms are run. The rate of collapse of stock brokerage firms trading in the Nairobi Securities Exchange (NSE) has been alarming. Over the past few years, Kenyan investors have watched desperately as various brokerage companies collapse resulting in huge investment losses. Analysts have attributed this problem to leadership and governance issues, yet, no conclusive studies had been done to test this presupposition. The aim of this study, therefore, was to assess the role of strategic leadership and corporate governance practices in mitigating risk and maximizing investors’ returns in the stock market. The study adopted a descriptive design. A sample size of 64 managers from finance and operations departments was selected randomly in each organization involved in this study. Primary data was collected using questionnaires and analyzed using mean, standard deviation and coefficient of variation. The major findings were that all the brokerage firms have boards of directors. However, majority of board members did not have adequate skills, knowledge or experience in strategic leadership, stock brokerage finance and risk management. The study concluded that corporate governance and strategic leadership practices were not being applied optimally to mitigate risks in the firms under study.