Corporate Governance and Financial Performance of Reinsurance Corporations in Kenya
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Date
2021
Authors
Muchiri, Evalyne Wairima
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Financial performance of Reinsurance firms is important in any economy. In 2016, the reinsurance business underwriters incurred 7.8% decline in claims amounting to 8.2 billion Kenyan Shillings from 8.9 billion which was recorded in 2015. Similarly, the firms experienced marginal decrease of 18.78% in management expenditure which amounted to 267.8 million Kenyan Shillings compared to 329.7 million which was recorded in 2015. The study sought to explore how financial performance of Reinsurance Corporation in Kenya is affected by the corporations’ corporate governance. The study aimed at achieving specific objectives such as; determining the effect of board size, board Composition, board independence, Chief executive officer Duality, on financial performance of Reinsurance Corporation in Kenya; in this study the target population was seven (7) reinsurance companies with physical presence in Kenya. The research design was a casual research design; this study used secondary data, where quantitative data on board size, board Composition, board independence, Chief executive officer and Return on asset was gathered through review of published audited annual reports of the seven selected reinsurance Companies for the period of study 2013 to 2017 financial year. The research adopted regression analysis to establish the extent to which financial performance of reinsurance companies is influenced by the companies’ corporate governance practices. The study results indicated that corporate governance in regard to Chief Executive Officer duality, board independence, board composition, and board size has a significant effect on the financial performance of reinsurance corporations in Kenya. Size of the board size was established to have a positive significant relationship with the corporations’ financial performance. A similar relationship was found to exist between composition of the corporations’ board of directors and their financial performance. Further, the study revealed a positive significant relationship between independence of the board and financial performance measures of Return On Assets. Further the mean proportion of Chief Executive Officer duality was was established to be 27.60%. Following findings of the analyses, the study recommends the Reinsurance Corporations in Kenya to stick to the recommended board size, board composition, board independence and Chief Executive Officer duality. The study suggests more studies to be carried out taking into account other performance variables such as leverage and debt.
Description
A Research Project Submitted to the School of Business in Partial Fulfilment of the Requirements for the Award of the Degree of Master of Business Administration (Finance Option), Kenyatta University, August, 2021
Keywords
Corporate Governance, Financial Performance, Reinsurance Corporations, Kenya