Board Composition and Financial Performance of Manufacturing and Allied Firms Listed at the Nairobi Securities Exchange, Kenya
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Date
2023-10
Authors
Ngui, Irene Ndanu
Atheru, Gerald
Journal Title
Journal ISSN
Volume Title
Publisher
IAJEF
Abstract
The board's role is to protect the shareholder's
interest; their allegiance is to the shareholders
by protecting their assets. Therefore, the
board's leadership and performance greatly
influence the corporate bodies' monetary. The
listed manufacturing firms' performance has
been declining over time. With board
composition having potential attributes to the
performance of various organizations, there
has been various performance indication in
the manufacturing firms traded in the NSE
with companies like Mumias having
extremely poor performance. This can be seen
in the reported earnings after tax in 2019,
which were Ksh12.16 million, while the same
company had after-tax profits of Ksh13.04
million in 2016. This indicates a reduction in
the monetary profitability of the sector. In
2014 Mumias Company recorded a return on
assets to be 2.5% in 2014, a decrease to 0.6%
in 2015, and a further decline to 0.02% in
2015. Similarly, the return on equity of East
African Breweries was recorded to fluctuate
from 0.6% in 2014 to 0.5% in 2015 and 0.7%
in 2017. The project examines the board
composition consequences on manufacturing
companies' monetary performance traded at
the NSE. The aim is to evaluate board
diversity's impact on the board’s size, gender,
independence, and education on the monetary
efficiency of the manufacturing organizations
traded in NSE. Agency, stakeholders, and
resource dependence theories will be used. As
a result of the small numbers, a census
approach will be employed. Using various
descriptive statistics, the collected Panel
secondary data from the monetary reports and
monetary statements after audits will be used
and analyzed to give the findings on how their
boards' composition impacts the companies'
financial performance. Multiple regression
and interdependence analysis will also be
employed for concise and effective analysis.
The hypotheses testing will be based on
multiple regression techniques. This will be
guided by a threshold of 0.05 significant level
using stationary, auto interdependence,
normality, heteroskedasticity, and
multicollinearity tests. The study will be
subjected to all ethical guidelines in Kenya,
with the results displayed in tables.
Description
Article
Keywords
Board Composition, Financial Performance, Nairobi Securities Exchange
Citation
Ngui, I. N., Atheru, G. (2023). Board composition and financial performance of manufacturing and allied firms listed at the Nairobi Securities Exchange, Kenya. International Academic Journal of Economics and Finance, 3(10), 397-412.