Corporate Governance Practices and Performance of Semi-Autonomous Government Agencies: The Case of National Hospital Insurance Fund
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.