Effect of corporate governance on financial performance of print media houses in Kenya
Ahmed, Arwa Abubakar
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Recent global events concerning collapse of prominent businesses, changing patterns of share ownership and world-wide wave of privatisation, increased investor activism, private sector development and improved technology have put back on the policy agenda and intensified the debate on the implementation of corporate governance mechanisms as a means of increasing firm financial performance. This study therefore, attempts to address the relationship between corporate governance and firm performance with evidence from the print media houses in Kenya using a regression analysis for the period 2006-2009. Using a structured questionnaire to the respective firms, specific corporate governance practises applied by print media houses in Kenya were identified. The literature review identified four sets of attributes that affected corporate governance; Disclosure, Board Composition, Conflicts and Ethics, and Shareholder Rights which provided the respective corporate governance variables. On the other hand, the financial variables used were based on a study by Klapper and Love (2004) who found out that firm level governance is correlated with Firm Size, Sales Growth and Assets Composition. To investigate the relationship between corporate governance and financial performance, a test for correlation was done between corporate governance variables and performance measures indicated by Tobin's Q. My findings reveal that there is evidence that better standards of corporate governance are positively related to better financial performance. The study also found out that the quality of corporate governance for the print media houses has been improving over the years.