Corporate Governance Practices and Performance of Semi-Autonomous Government Agencies: The Case of National Hospital Insurance Fund
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Date
2016
Authors
Ali, Mohamud M.
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Corporate governance issues in public sectors have become a popular discussion topic
in the last two decade. According to Organization for Economic Cooperation and
Development (OECD) corporate governance is the system by which business
corporations are directed and controlled. Its structure specifies the distribution of
rights and responsibilities among different participants in the corporation, such as the
board, managers, shareholders and other stakeholders, and spells out the rules and
procedures for making decisions on corporate affairs. By doing so, it also provides the
structure through which the company objectives and the means of attaining those
objectives and monitoring performance are set. The study aimed at establishing the
relationship between corporate governance practices and performance of National
Hospital Insurance Fund (NHIF). The objectives of the study were to determine the
effect of Board attributes, reporting disclosure and risk management on the
performance of National Hospital Insurance Fund. The study employed a descriptive
survey design. To achieve the objectives, the study was hinged on stewardship theory,
stakeholder theory and agency theory. The population of study was 172 respondents
comprising of senior managers, middle level managers and working at NHIF
headquarters in Nairobi. Stratified random sampling was used basing the strata on the
various management levels to select 69 respondents. Data was collected using semi
structured questionnaires. The questionnaires were pilot tested to refine the questions
before being administered to the selected sample. This study used the quantitative
method of data analysis which was achieved by use of descriptive statistics and
multiple. The data was analyzed using Statistical Package for Social Sciences (SPSS)
version 21 and presented using tables and pie charts to give a clear picture of the
research findings at a glance. The study established that disclosure had a positive
effect on performance of NHIF and that risk management enhanced the performance
of NI-llF. The study concludes that board attributes like board size, board
-independence, CEO duality, board diversity, board composition and frequency at
which board members held meeting all affected NHIF performance. The study further
concludes that reporting disclosure and risk management had a positive effect on
performance of NHIF. The study recommends that special attention should be taken
when dealing with the number of board members. The size of the board should match
with the size of the NHIF to avoid scenarios of having too small boards which will be
overburdened with the firm's work which will lead to underperforming, and at the
same time boards should not be too large as the inefficiency of large boards will also
lead to underperforming of the board members. The management of NHlF should
provide clear accounts to users with a clear picture of their operational and derivatives
activities. They should disclose meaningful summary information, both qualitative
and quantitative, on the scope and nature of their operational and derivatives activities
and illustrate how these activities contribute to their earnings profile. NHIF should
disclose information produced by their internal risk measurement and management
systems on their risk exposures and their actual performance in managing these
exposures. Linking public disclosure to internal risk management processes helps
ensure that disclosure keeps pace with innovations in risk measurement and
management techniques.
Description
A Research Project Submitted to the School of Humanities and Social Sciences in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Public Policy and Administration, Kenyatta University