Role of corporate governance and strategic leadership practices in mitigating risks in stock brokerage firms in Nairobi
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Date
2015-02-24
Authors
Minja, David
Kiarie, John
Journal Title
Journal ISSN
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Abstract
The success or failure of any organization rests on its leadership. In the 21st century, corporate
governance is becoming a matter of enormous public attention and concern. The increase in investors’
interests in the way stock brokerage firms are led, changes in the institutional framework and policies
and demand for ethical leadership from stakeholders have contributed significantly to renewed interest
in the way these firms are run. The rate of collapse of stock brokerage firms trading in the Nairobi
Securities Exchange (NSE) has been alarming. Over the past few years, Kenyan investors have watched
desperately as various brokerage companies collapse resulting in huge investment losses. Analysts
have attributed this problem to leadership and governance issues, yet, no conclusive studies had been
done to test this presupposition. The aim of this study, therefore, was to assess the role of strategic
leadership and corporate governance practices in mitigating risk and maximizing investors’ returns in
the stock market. The study adopted a descriptive design. A sample size of 64 managers from finance
and operations departments was selected randomly in each organization involved in this study. Primary
data was collected using questionnaires and analyzed using mean, standard deviation and coefficient
of variation. The major findings were that all the brokerage firms have boards of directors. However,
majority of board members did not have adequate skills, knowledge or experience in strategic
leadership, stock brokerage finance and risk management. The study concluded that corporate
governance and strategic leadership practices were not being applied optimally to mitigate risks in the
firms under study.
Description
Keywords
Strategic leadership, corporate governance, risk management.
Citation
Journal of Business Administration and Management Sciences Research Vol. 2(3), pp. 080-090, March, 2013
http://www.apexjournal.org/JBAMSR