Corporate Governance and Performance of Selected State Corporations in Tana River County, Kenya
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Date
2022
Authors
Abubakar, Godana
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
State corporations in Tana River County have not been performing well in terms of financial viability efficiency and productivity as evidenced by annual impact reports and Auditor General Reports of the year 2018. The chief goal of the study was to determine the effect of corporate governance on the performance of State Corporations in Tana River County. Specific objectives included; determining the effect of board diversity, stakeholder’s participation, board independence and transparency in operations on the performance of the two selected state corporations in Tana River County. The main theories used in this study were agency, stakeholder’s, stewardship and resource dependence theories. The research design was descriptive research design. The population consisted of 80 respondents comprising of board members, middle-level managers and lower level managers. Census method was used due to small population while data collection was done through questionnaire. In this study a pilot test was carried out with 8 respondents from Tana and Athi River Development Authority. All the five variables went through reliability test through Cronbach alpha statistical tests and their results presented in form of a table with a coefficient of 0.7 being the threshold. Mean and standard deviation were used to measure variable characteristics. Multiple regression analysis was used to analyze the correlation between the variables. Data was analyzed using SPSS and the findings presented using tables. The study observed ethics expected to be observed when undertaking research. In correlation analysis findings showed that board independence had a strong positive correlation with performance while the other three variables had a moderate positive correlation with performance. In regression analysis, organizational performance was insignificantly explained by board diversity, stakeholder involvement and transparency in operations but significantly explained by board independence. Based on these findings it was concluded that board diversity, stakeholder involvement, board independence and transparency in operations positively related to the performance of state corporations in Tana River County. The study recommended that although it is important to have a diverse board, experience, expertise and exposures of the various board members need to be considered when selecting them. Concerning stakeholder participation the study recommended that it is important to involve and allow other stakeholders to participate on issues to do with the running of the state corporations. Board of directors should monitor the management of the corporations on behalf of the shareholders and undertake controls over the decisions of managers. Conflict of interest should be eliminated at all cost. Lastly the study recommended that openness in the operations, transparency and information sharing should be enhanced in the organizations.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of the Requirements for the Award of the Degree of Master of Business Administration (Strategic Management Option) of Kenyatta University, November, 2022
Keywords
Corporate Governance, Performance, State Corporations, Tana River County, Kenya