Contribution of Corporate Governance Leadership Practices on Performance of Listed Companies in Kenya

Abstract

Corporate governance has dominated the leadership policy agenda in developed market economies for more than a decade and the African continent is gradually adopting it in shaping the policy agenda of the leadership and governance of her organisations. The Nairobi Securities Exchange (formerly Nairobi Stock Exchange) (NSE) is the only listing body in Kenya. The study’s main objective was to establish the contribution of Corporate Governance leadership practices on the performance of listed companies in Kenya. The specific objectives of the study were: to study contribution of leadership structures; composition; independence; stakeholders' ownership and ownership concentration on the performance of listed companies in Kenya. The study relied on a positivist research philosophy and adopted survey research design. The study population was sixty-two firms listed on the Nairobi Securities Exchange. Both stratified random sampling technique and simple random sampling techniques were adopted to get the sample of listed company employees to be included in the study. Stratified sampling was applied to group the sixty-two companies into nine categories (strata). Nine companies were then selected using simple random sampling from each of the nine stratums. Two hundred and thirty-seven respondents were determined from the sample of nine listed companies. The study used primary data, collected using questionnaires. Pilot testing equivalent to 10% of the 237 respondents to check the reliability and validity of the questionnaires. Cronbach’s alpha was used to test for internal reliability of each variable used in the study. The collected study data was sorted, coded and inputted into the statistical package for social sciences (SPSS) for production of graphs, tables, descriptive statistics and inferential statistics. Data analysis was done using descriptive statistics, correlation and regression analysis. Overall, the study established that corporate governance leadership practices had a positive contribution on the performance of listed companies in Kenya. Specifically, the study established that corporate governance leadership composition and ownership concentration made the most positive contribution, among the independent variables investigated. The study revealed that outsider leaders have more impact on the company performance as they have enough incentive to monitor the company operations since their own reputations depend on it. The study recommended that listed companies should apply viable leadership structures for the realisation of sustainable company growth; industry of the company and corporate governance to guide on effective leadership strategies; embrace the principle of stakeholders' ownership in the management of listed companies’ affairs. The findings from the study significantly benefit investors, Board of Directors, shareholders, NSE, CMA, government officers, scholars, researchers and students.