Abstract:
With the growing competition of globalization, strategic decision makers have been faced with the
competing interests of external and internal stakeholders such as greater diversity in corporate
governance, undertaking more investments in corporate social responsibility and maximizing
financial performance. As a result, strategic decision makers today must not only increase their
financial performance, but also satisfy the increasing expectations of customers, suppliers and
society as a whole. The objective of this study was to examine the effects of the board
characteristics on the social performance among Kenyan MFIs. It focused on the board size, board
terms, board committees, director remuneration, multiple directorship, boards’ skills and experience
and the independence of directors. This study adopted positivist approach, deductive approach and
explanatory research design. Population of the study consisted of all the MFIs registered by the AMFI
as at 31st March 2012. Data was analyzed using quantitative and qualitative methods. Qualitative
data was analyzed to yield descriptive, Pearson linear correlation coefficient, one way ANOVA, linear
multiple regression and inferential statistics. The major findings of the study are: that a significant
negative relation exists between social performance and board size, director remuneration,
independence of directors while multiple directorship, existence of board committees are positively
related. Multiple directorship has no effect on the social performance of an MFI. Overall, the results
show that MFIs in Kenya can improve their social performance by improving on their board
composition in line with the Capital Markets Authority guidelines.
