Corporate Governance Practices and Financial Performance of Commercial Banks Listed at the Nairobi Securities Exchange, Kenya

Abstract

Incidences of collapses increased mergers, and acquisition of commercial banks attributed to poor CG systems have occurred in Kenya's banking and the regional area over the last few years. Research aimed at corporate governance in commercial banks and financial results by concentrating on different components of corporate governance has been carried out. Be that as it may be, there is still an awareness gap in the investigations focused on corporate governance and how it impacts the financial performance of the NSE-listed commercial banks. The overall objective of the review was to investigate the four explicit targets and their consequences for the performance of the investigation by the NSE-listed commercial banks; board compensation, board composition, financial expertise and the size of the audit committee based on these approaches: the control approach, agency approach, approach of inspired confidence and resource dependency approach. To obtain an enlightening exploration project, the target populace was the 12 NSE-listed commercial banks in Kenya. For collecting secondary data, the use of information sheets was used. Regression analysis has been used to assess the financial performance effect of the commercial banks listed in the NSE, Kenya. The study showed that the link between financial performance and board compensation was positive (B=0.174) and statistically significant (P-value=0.022<0.05) and that the composition of the board had a negative (B=-0.850) and meaningful (P-value=0.000<0.05) relationship to financial performance. The results also showed that financial experience was negative (B=-0.256) and negligible (P-value=0.000<0.05). The study concluded that the financial performance of Kenyan banks is significantly affected by board compensation, board composition and audit committee size.