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Good corporate governance is indispensable for the survival and performance of corporate entities. The purpose of the Capital Markets Authority’s (CMA) Guidelines on good corporate governance was to improve governance practices in the corporate sector, as well as attract and retain investors for sustained economic growth. A rampant trend of commercial banks placed under receivership between 1990 and 2005 inspired this study. As at the time of the study, the Guidelines had been operational for about eight years. Although statistics at that time suggested that the banking sector had improved by reducing the proportion of non-performing loans, there was no documentation linking the Guidelines to this achievement. I sourced primary data from 16 commercial banks, seven of which traded at the Nairobi Stock Exchange (NSE). I applied one-way Analysis of Variance (ANOVA), Pearson’s Correlation Coefficient and multiple regression models to analyze the data. The results show that listed and unlisted commercial banks were significantly different in terms of board size, proportion of executive and non-executive directors, gender composition, cost of board maintenance, composition of audit committees, frequency of financial disclosures and more importantly, financial performance. The study emphasizes the need for a legal framework to enforce alignment with CMA Guidelines to safeguard members of the public from losing their savings and also ensure stability of the financial sector to enable the country attain targeted economic growth at 10 percent per annum.
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Papers that cite the same references — the relational fallback while embeddings are still backfilling.
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