Influence of Corporate Governance on Financial Management in Tertiary Institutions in Nakuru County, Kenya

Abstract

Many tertiary educational institutions in Kenya face financial challenges. The general objective of the study was to determine the influence of corporate governance on financial management in tertiary institutions in Nakuru County, Kenya. The specific objectives included to examine the influence of corporate leadership and transparency on financial management of these institutions. The theories reviewed in this study included stewardship theory, institutional-centric theory of finances and agency theory. This study adopted a cross-sectional research design. The management and finance officers working with the tertiary institutions in Kenya constituted the target population. The 324 aforementioned staff working with the tertiary institutions in Nakuru County comprised the accessible population. Stratified random sampling was used to draw 58 respondents from the accessible population. A structured and self-designed questionnaire which was also self-administered was used to facilitate data collection. A pilot study was carried out amongst randomly selected management and finance staff working with tertiary institutions in Narok County. Data processing and analysis were aided by the use of the Statistical Package for Social Sciences (SPSS) Version 24. Data analysis constituted descriptive statistics. More so, the analysis encompassed inferential statistics in form of Pearson’s correlation and multiple regression analyses. The results of the analyses were presented in tables. The study revealed that corporate leadership and transparency had significant influence on financial management of tertiary institutions in Nakuru County. It was concluded that corporate leadership led to substantive improvement of financial management. The study inferred that transparent governance, transparent faculty, and transparent remuneration system were important components of transparency in that they influenced financial management in tertiary institutions in Nakuru County. The study recommended inculcation of facets of corporate leadership that are likely to guarantee improved financial management in tertiary institutions. In addition, it was recommended that there ought to be regular financial reporting by the department concerned as opposed to relying on only annual financial reports.