A Survey of the Corporate Governance practices of Commercial Banks listed on the Nairobi Stock Exchange.

Abstract

The argument has been advanced time and time again that the governance structure of any corporate entity affects the firm's ability to respond to external factors that have some bearing on its performance. Corporate governance is a concept that involves practices that entail the organization of management and control of companies. It reflects the interaction among those persons and groups, which provide resources to the company and contribute to its performance such as shareholders, employees, creditors, long-term suppliers and subcontractors. This study was designed with three main objectives: to highlight the extent that banks listed in the NSE practice corporate governance; to identify the various corporate governance activities commercial banks practice and to determine the factors that influence corporate governance within the banking industry in Kenya. A descriptive survey design was used for the study. The population of study comprised of 48 senior managers from commercial banks listed in NSE, that is, six (6) respondents from each head office of the 8 banks. Primary data was collected using questionnaires, which were filled in by the senior managers in these banks. The data from the questionnaires on corporate governance practices was analysed using descriptive statistics with the help of the Statistical Package for Social Sciences (SPSS). Mean scores and percentages were used to interpret the data. The results were then presented in tables and charts. The Corporate Governance Index (CGI) aims to measure the price and return performances ofNSE-listed companies resulting from the assessment of the company's compliance with the corporate governance principles as a whole. This was computed based on the dimensions of corporate governance quality as stipulated by the Capital Markets Authority (CMA) guidelines.