Effect of Board Size and Board Share Ownership on the Financial Performance of Commercial Banks Listed at the Nairobi Securities Exchange in Kenya
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Date
2023-10
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IJRISS
Abstract
Financial performance of commercial banks in Kenya has been deteriorating due to low investments caused
by poor corporate governance practices, as reported by instances where boards of directors have refused to
embrace good corporate governance practices, resulting in poor financial effectiveness. The research sought
to ascertain how the board size and board share ownership affect the financial performance of commercial
banks listed on the NSE during the years 2016 to 2020. A descriptive research design was adopted and was
anchored on agency theory. Secondary data was obtained from the listed commercial banks published on the
Kenyan Investors website, Capital Markets Authority Library, Nairobi Securities Exchange websites, and
their websites. Inferential and descriptive statistics were utilized in data analysis and the Panel Data
Regression Model was analyzed using Stata 16. Findings showed that the average board size for the 12 NSElisted commercial banks in 2016 was 12, 10 in 2017, 8 in 2018, 11 in 2019 and 9 in 2020. Average board
share ownership was 2.10% in 2016, 2.32% in 2017, 2.61% in 2018, 2.92% in 2019 and 3.12% in 2020.
The study recommends commercial banks to have a bigger board which might have more specialized skills,
well-rounded expertise, and closer supervision of upper management which would eventually lead to
optimal judgments and better financial performance.
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Bach, I., & Mwenda, N. (2023). Effect of Board Size and Board Share Ownership on the Financial Performance of Commercial Banks Listed at the Nairobi Securities Exchange in Kenya. International Journal of Research and Innovation in Social Science, 7(12), 1550-1556.