Corporate governance practices : a study of forex bureaus in Nairobi, Kenya

Abstract

The purpose of this study was to assess the corporate governance practices in forex bureaus in Nairobi. Other specific objectives of the are study include independence and structure of the board, control systems and audit practices, effects of corporate governances practices on performance and weaknesses of corporate governance. The study is considered important to various stakeholders including major players in the corporate industry, investors, top management of forex bureaus, the government as well as other researchers in this field. The researcher adopted a descriptive research design. The population of study comprised all the 75 forex bureau managers. This study adopted a complete census of the population. This was because the number was not too big and it was possible to reach the whole population as soon as possible. Data was collected by use of questionnaire method which had both closed and open ended questions. Data was received from 66 respondents, representing 88% response rate and analyzed using descriptive statistics including frequency distribution tables, charts and percentages. . Finding of this study suggests that established corporate governance practices in forex bureaus in Nairobi, includes the existence of the board of directors that also comprise independent board members, composition of the board of directors and the existence of internal controls. In addition, the study has established the effects and weaknesses of corporate governance practices in forex bureaus in Nairobi, Kenya. The effects include improved profitability, return on investment and reduced business risk, while the weaknesses includes irregular external audits, adequacy of staff rewards and internal controls in place. Corporate governance practices should be improved in forex bureaus by constituting board of directors that compose of independent people with intergrity, well informed and non-executives directors. Regular external audits should be carried out in forex bureaus and staff reward systems should be all inclusive. The Central Bank of Kenya, as a regulator should formulate relevant laws to ensure corporate governance practices are followed in forex bureus. The Government should create enabling environments.