ISSN 2348-1218 (print) International Journal of Interdisciplinary Research and Innovations ISSN 2348-1226 (online) Vol. 8, Issue 2, pp: (23-30), Month: April - June 2020, Available at: www.researchpublish.com
CORPORATE GOVERNANCE AND PERFORMANCE OF SELECTED SAVINGS AND CREDIT COOPERATIVE SOCIETIES IN NAIROBI COUNTY, KENYA DIAZ MUTHIORA MBIRITI 1, ELISHIBA MURIGI 2 1
2
MBA Student, Department of Business Administration, School of Business, Kenyatta University, P.O. Box 4384400100, Nairobi, Kenya, Location: Nairobi. Email address:
Lecturer, Department of Business Administration, School of Business, Kenyatta University, P.O. Box 43844-00100, Nairobi, Kenya, Location: Nairobi
Abstract: The SACCO industry has over time become vital in Kenya. This sector is a key player in the nation as it controls around 43 percent of gross domestic product (GDP). However, the lack of proper direction, control and accountability by the directors and management in SACCOS to the principal shareholders, exposes them to irregularities. This therefore has brought the need to investigate corporate governance effect on the performance of selected SACCOs in Nairobi City County, Kenya which was the general objective of the study. The specific objectives were to establish the effect of size of the board, board composition, gender balance of the board members and board members qualification on SACCO performance in Nairobi, Kenya. The study was underpinned stakeholders’ theory and agency theory. The focused on six selected SACCOs in Nairobi City County based on a sample of fifty eight respondents. The result from the regression analysis showed that the board composition and board size were significant in predicting the performance of SACCOs at 0.05 level of significance with p values of 0.009 and 0.31 accordingly. However the board members’ education and gender diversity were not significant in predicting the performance of SACCOs with p values of 0.150 and 0.178 respectively. This study thus suggests that SACCOs should put much emphasis on a lean board size and ensure that the composition of the board takes into consideration the professional and knowledge diversity of the board members. Keywords: Corporate Governance, Board Composition, Board Size, Board Members’ Qualification, Gender Diversity and Performance.
1. INTRODUCTION AND BACKGROUND The world of business today is an ever changing one having various challenges requiring strong systems of corporate governance and sound system for decision making. Mugambe (2008) opined that SACCOs have spurred development of the economy globally despite most of them going under soon after inception. There are external factors that can cause financial failure of SACCOs which may include lack of information, deregulation. Awino (2011) further indicate that the native management and governance of SACCOs by informal groupings which later formalize leads to poor financing management of the SACCOs with majority of them not coping with the ever growing competition in the financial services sector. Developing nations are in recent times rapidly embracing good corporate governance which is due to its direct influcen on the growth and sustainability of countries (Kalungu, 2012). Good governance brings about investor confidence and goodwill (Manafi, 2015). Organizations now seek to improve the governance practices which the follow as it is key in
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