Financial Management and Performance of Commercial State owned Enterprises in Kenya
Loading...
Date
2019-06
Authors
Kamau, Waweru Allan
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Most SOEs are faced with a challenge of poor financial management as reflected in
misuse of financial resources and inefficiencies in internal control systems. At the same
time, most state-owned enterprises (SOEs) have consistently been making losses and
some of the reasons cited are lack of sound financial management, poor reporting and
tracking systems, lack of internal control systems and audit teams. These challenges
result into the need of determining the interaction between financial management and
performance. The main objective of this study was to assess financial management and
performance of Commercial State-Owned Enterprises in Kenya. Specifically, the study
sought to determine how internal control system, budgeting, financial reporting and
tracking and risk management influence performance of SOEs. At the same time, the
study sought to determine the moderating effect of organizational culture in the link
between financial management and performance. The study was anchored on three
theories including contingency, risk and resource-based theory, the empirical literature
covers the five independent variables and the dependent one and the conceptual
framework draws a picture of the variables and measuring indicators and the linkage of
the variables. The type of design employed was descriptive in nature. The population of
the study comprised of 29 Commercial State-Owned Enterprises and the respondents
were 111 finance directors from these firms. Census sampling was adopted where all the
111 finance directors formed the study sample. For collection of data, questionnaires
were used. The analysis of the collected data was done descriptively and inferentially. To
present findings, tables and figures were used. From inferential statistics, internal
control, budgeting, financial reporting and tracking, risk management and organizational
culture all statistically influence how SOEs perform financially. The study concludes
that internal control, budgeting, and financial reporting and tracking, risk management
and organizational culture all have statistical and significant influence on the ability of
SOEs to perform financially. The study recommends that the Chief Executive Officers of
State-owned enterprises should initiate policy guidelines in regard to corporate
governance and ensure that their full implementation with regular feedback. The finance
managers of state-owned enterprises should closely work with budgeting committee to
ensure that proper budget is put in place for improved performance of the organizations.
The accountants of state-owned enterprises should ensure that regular financial reports
are prepared in line with International Financial Reporting Standards. Risk managers of
all state-owned enterprises should regularly assess and advice the management on
inherent risks that are likely to affect financial performance. The management of stateowned
enterprises should improve on the norms and beliefs of employees through
increased team work, performance appraisal and reward systems
Description
A Research Project Submitted to the School of Business in
Partial Fulfilment of Requirements for the Award of the Degree
of Master of Business Administration (Finance Option) at
Kenyatta University, June, 2019