Effect of Corporate Governance Practices on Financial Performance among Parastatals in Kenya: Case of Kenya Pipeline Company (KPC), Eldoret.

Abstract

Poor financial management and lack of good governance structures make it difficult for the parastatals to constantly underperform thus lagging the private sectors. Due to this, the services of these parastatals have been substandard and unreliable leading to lack of confidence by the public in them. The study aimed to evaluate the impact of practices in corporate governance on financial performance of parastatals in Kenya with specific regard to the Kenya Pipeline Company, KPC, Eldoret. Among the coined objectives of the study included: to evaluate the impact of board independence on financial growth, to establish the effect of board members knowledge on financial performance, to investigate the influence of board transparency on financial performance and to find out how financial performance is impacted by the leadership of the board of Kenya Pipeline Company. The study employed descriptive survey design and targeted a participant population of 178 employees who comprised of employees from all levels of management within the company. Using the statistical formula described by Yamane (1967), a sample size of 123 respondents was reached and selected from the population. The study applied a simple random probability sampling. Both primary and secondary data collection methodologies were used for data collection. Research instruments was validated by the university supervisors piloting 2 state corporate states are used to test the reliability of the questionnaires. A correction coefficient of <0.7 was within acceptable limit. In data analysis, a descriptive statistic was used.