Board Characteristics and Firm Value of Listed Non-Financial Firms at the Nairobi Securities Exchange, Kenya
Patel, Sidhiben Jayeshkumar
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The rising concerns among various stakeholders on the need for improved value in firms where they have interests in has not only covered a single firm or locality but have captured even the multinational corporation thus a global reach. Most of the corporations have been forced to liquidate in situations where prolonged periods of decreased firm value and eventually the management loses control. This study sought to evaluate the influence of board characteristics on value of non-financial firms listed at the NSE with the objective of establishing the influence of board size, board composition, board independence and audit committee on value of listed non-financial firms at the NSE. Agency theory, Stewardship Theory and Signaling Theory were the major theories that the study reviewed. The study employed firm size to act as the moderating variable. A census survey on all the 36 non-financial firms listed at the NSE was adopted. Further, both correlational and descriptive research designs with positivism as the research philosophy were adopted. The researcher used secondary panel data covering the period 2015 to 2019 with a record survey sheet as the data collection tool. Data was collected from published audited reports of non-financial firms listed at the NSE from Capital Markets Authority. Analysis of the data gathered was carried out using STATA after being subjected to the following diagnostic tests, for purpose of addressing any violation of ordinary least squares assumptions; multicollinearity, Hausman, normality, stationarity heteroscedasticity and autocorrelation tests. Panel regression of coefficients’ findings indicated that there was a positive and significant relationship between board size and value of non-financial firms listed at the NSE, positive and significant relationship between board composition and value of non-financial firms listed at the NSE, positive and significant relationship between board independence and value of non-financial firms listed at the NSE and a positive and statistically significant relationship between audit committee and value of non-financial firms listed at the NSE. Firm size has a significant moderating effect on the relationship between board characteristics and value of non-financial firms listed at the NSE in Kenya since the coefficient of determination rose after moderation. The study recommends the company board of directors, institute of corporate governance should ensure they have adequate board members as this will contribute to the goal of non-financial firms listed at the NSE. The CMA should prioritize having an independent board as it significantly contributes to the goal of listed non-financial firms which is to maximize value for shareholders wealth.