Corporate Governance Structure and Profitability of Deposit Taking Savings and Credit Co-Operative Societies in Nyeri County, Kenya
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Date
2019
Authors
Wanjiru, Peter Njuguna
Omagwa, Job
Journal Title
Journal ISSN
Volume Title
Publisher
IJSER
Abstract
Despite being great potential agents for national development in Kenya, SACCOs perform poorly. This poor performance points in a nutshell to the poor corporate governance practices by board of directors or other bodies that have been entrusted with the responsibility of governing the SACCOs. Corporate governance is tasked with overseeing and supervising management to ensure that organization goal and objectives are met. Studies that have been done on the effects of corporate governance structure on profitability show inconclusive results. Some studies found no relationship between corporate governance structures and profitability while other studies document a positive relationship. Further, there are limited studies on developing economies since most studies focus on developed economies. The study conducted a census of the 8 deposit taking SACCOs in Nyeri County and purposive sampling method was used to select 4 respondents from each SACCO making a sample of 32 respondents. A questionnaire was used to collect primary data while secondary data was obtained from the deposit taking SACCOs regulator SASRA via their website. The study adopted descriptive research design. Multiple regression analysis results indicated that 57.7% change in profitability of the deposit taking SACCOs were explained by corporate governance structure. Gender Diversity had a p-value of (p=0.004<0.05) indicating that it had significant effect on the profitability of deposit taking SACCOs hence the null hypothesis was rejected. Similarly, occupational expertise had a p-value of (p=0.011<0.05) indicating that it had a significant effect on the profitability of deposit taking SACCOs hence the null hypothesis was rejected. Finally, directors’ age had a p-value of (p=0.014<0.05) indicating that it had a significant effect on profitability of deposit taking SACCOs hence the null hypothesis was rejected. The study recommended that SACCOs should put in place by-laws that support gender balance, set minimum academic and professional qualifications as well as directors’ age to ensure quality governance, professionalism and inclusivity. SASRA, being the deposit taking SACCOs regulator should set regulations and conditions regarding corporate governance structure to ensure quality boards are in place to deliver their mandate to shareholders.
Description
Research Article
Keywords
Corporate Governance Structure, Directors Age, Board of Directors, Gender Diversity, Occupational Expertise, Profitability, Return on Equity, Return on Asset
Citation
International Journal of Scientific and Education Research Vol. 3, No. 02; 2019