CORPORATE GOVERNANCE PRACTICES AND PERFORMANCE OF COMMERCIAL STATE CORPORATIONS IN NAIROBI CITY COUNTY, KENYA

Lorna Kerubo Nyamwaro, Dr. Anne Marie Wairimu Mungai

Abstract


Commercial State Corporations in Kenya have been performing abysmally due to ineffective leadership, governance, and management practices. While most of these corporations have gone for restructuring as a remedy to salvage their performance, their performance has continued to decline. This study therefore sought to assess the effects of corporate governance practices on performance of commercial state corporations in Nairobi City County, Kenya. Specifically, the study sought to assess the effect of independence of directors on performance of commercial state corporations in Nairobi city County, Kenya, and to assess the effect of social responsibility on performance of commercial state corporations in Nairobi City County, Kenya. The study employed a descriptive research design. The study targeted a total of 276 respondents comprising of 46 top managers, 92 middle level managers and 138 lower level managers. The sample for this study was arrived at using the Slovin’s sample size. This study used simple random sampling to select 163 respondents. This study also used questionnaire to collect data relevant to this study. Quantitative data collected was analyzed using descriptive statistical techniques which are frequencies, mean, standard deviation. Inferential statistics which include Pearson correlation and the Regression Analysis Model was used to test the relationship between study variables. The significance of the model was tested at 5% level of significance. Data was analysed using Statistical Package for Social Sciences (SPSS) software. The study results were presented through use of tables and figures. The study concludes that independence of directors has a positive and significant effect on performance of commercial state corporations in Nairobi City County, Kenya. The study also concludes that social responsibility has a positive and significant effect on performance of commercial state corporations in Nairobi City County, Kenya. This study therefore recommends that the management of commercial state corporations in Nairobi City County, Kenya should give priority to independence of directors, and social responsibility.

Key Words: Corporate governance practices, Independence of directors, Social responsibility, Performance of commercial state corporations

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