TITLE:
Effect of Corporate Governance Structures on Organizational Performance of State Corporations in Education Sector in Kenya
AUTHORS:
Anthony Charles Mwangi, Wycliffe Misuko Nyaribo
KEYWORDS:
Corporate Governance, Diversity, Independence, Attributes, Performance
JOURNAL NAME:
Open Journal of Business and Management,
Vol.10 No.4,
July
29,
2022
ABSTRACT: Corporate governance structures are the
systems and regulations created within an organization, to help guide the
decision-making processes. This help in determining the respective roles to be
played by various stakeholders in the organization. Corporate governance has
been shown to have an impact on the performance of state corporations. However,
most of these studies concentrate on the board structures and how they affect
the financial performance of the organization in respect to Return on Equity,
Return on Assets and Tobin’s Q. This research 4.2 Corporations in the education
sector in Kenya. This area is least studied especially being a service-oriented
and largely non-commercial sector. The objectives of the study are to establish
the influence of CEOs attributes on performance, examine the influence of board
structure on performance and find out the impact of the audit committee on
performance of state corporations in Kenya. The study targets 171 respondents
across 27 sampled state corporations under the education sector in Kenya. The
respondents are drawn from senior and middle level managers, finance and
account officers and internal audit staff. The 27 state corporations were
selected using a stratified random sampling technique from the target
population of 45 state corporations. The data was collected for the three
objectives with specific questions on Board diversity, attributes of the CEO,
Independence of the Audit Committee. The data collection tool used a close-ended
questionnaire, there were 134 questionnaires returned out of the targeted 162,
through a drop and pick method. The data collected was cleaned, coded and
posted to SPSS Ver 23 for analysis. A regression model was applied to analyze
the existing relationship between the variables; independent variables: CEO
Attributes, Board Diversity and Audit Committee effect on the organizational
performance being the dependent variable. Diagnostic tests were conducted to
check for normality and multicollinearity. The study found that CEOs
attributes, Board of directors’ diversity and audit committee had significant
effect at α = 0.05 and contribute 27.7% of variations of performance in state
corporations in education sector in Kenya. The study therefore recommends that,
for enhanced performance of state corporations in the education sector in
Kenya, stakeholders should appoint CEOs with rich experience, boards with
diversity including gender and audit committee members who have higher
qualifications especially, professional qualifications.