Corporate Governance and Performance of Companies Listed at Nairobi Securities Exchange: Does Operating Environment and Top Management Team Characteristics Influence the Relationship?

Abstract

The general objective of the study was to determine whether operating environment and top management characteristics influence the relationship between corporate governance and performance of companies listed at the Nairobi Securities Exchange. The study aims to add value to decision making by creating a framework that can be adopted by the Nairobi Securities Exchange and other regulatory agencies like capital market authority in designing guidelines for corporate governance practices on out how firms should be governed to counter the arising challenges that continues to hinder them from raising capital from the public to post superior performance consistent to the expectations of the shareholders. The study was guided by three theoretical foundations; Agency Theory, the Environmental Dependence Theory and the Upper Echelons Theory. This study used a positivism research philosophy. The study used a cross sectional survey. The target population for the study was drawn 66 firms listed at the Nairobi Securities Exchange. The study used both primary and secondary data which were collected using questionnaires, interviews and desk review. Data analysis took place at two levels – descriptive statistics level and inferential statistics level. The findings indicate that corporate governance, operating environment and top management team characteristics jointly and significantly influence firm performance.  The implication is that firms should base on management characteristics when considering maximizing shareholders interest through corporate governance practices. This will provide an opportunity for organizations to deliver to the expectations of shareholder's interest through proper formulated strategies associated with best principles of corporate governance.