ISSN E 2410-3500

Corporate Governance Strategy and Firm Value in the Context of Commercial Banks in Kenya



Vol. 7, Issue 04, PP. 05-07, April 2020

DOI

Keywords: Corporate Governance, Firm Value, Commercial Banks in Kenya

Download PDF


Firm value is dependent on Corporate governance which leads to increased value. High valued firms attract more investors. Towards firm value protection, minimum capital requirements were raised by the Central Bank of Kenya from 250 million to 1 billion shillings on commercial banks to cushion bank shareholders value. Despite the increased oversight and regulatory efforts on corporate governance to protect and enhance firm value, some commercial banks have recorded low firm value. Hence, this study sought to investigate the effect of corporate governance on firm value of commercial banks in Kenya. The study was anchored on Agency Theory. Explanatory research design was adopted. Target population was forty four Kenyan commercial banks, where a census was conducted.  Secondary data was collected from published financial statements and bank websites for the period 2009 to 2018. STATA version 13.0 was used for data analysis. Descriptive and inferential statistics specifically panel regression was used in data analysis. The study findings established that there is a statistically significant effect between corporate governance and firm value of commercial banks in Kenya. Therefore, the study concluded that firms with good corporate governance have high firm value. And as such, these calls for the management of the commercial banks improve corporate which will go a long way in improving firm value. There is also need for Central bank of Kenya, Capital Markets Authority and Nairobi Securities Exchange to emphasis on corporate governance to enable achievement of high firm value.


Evans Machero Ochego: Email:evansmach@yahoo.com, Box 64135-00620,Nairobi,Kenya, School of Business, Kenyatta University.

Job Omagwa: Email:jomagwa@gmail.com, School of Business, Kenyatta University

Stephen Muathe: Email:muathesm@yahoo.com, School of Business, Kenyatta University


Evans MacheroOchego Job Omagwa Stephen Muathe "Corporate Governance Strategy and Firm Value in the Context of Commercial Banks in Kenya" Internat Economics and Management Works Vol. 7 Issue 04 PP. 05-07 April 2020


  1. Markhan, A. (2006). Ethics as method,Method as Ethics. Journal of information Ethics, 37-54.
  2. Waweru, N. (2014). Determinants of quality corporate governance in Sub-Saharan Africa:Evidence from Kenya and South Africa. Managerial Auditing Journal, 455-485.
  3. Barako, D., Hancock, P., & Izan, H. (2006). Factors influencing voluntary corporate disclosure by
  4. Gakeri, J. (2013). Enhancing Kenyas securities markets through corporte governance Challenges and opportunities. International Journal of Humanities and Social Sciences,3 (6), 94-117.
  5. Musikali, L. M. (2015). Legislating Corporate Social Responsibility in Kenyas Extractive Industry: Acase Study of MUI coal Mining Project. African Nazarene Law Journal,3(1), 65-82
  6. Habbash, M., & Bajaher, M. (2014). An Empirical Analysis of the Impact of Board Structure on the Performance of Large Saudi Firms. The Business Review,Cambridge,22(1), 152-158.
  7. Evidence from Funding of Corporate Pension Plan. The review of Financial Studies,25(3), 868-912.
  8. Jensen, M., & William H.(1976). “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. McGraw-Hill, 1984.
  9. Filatotchev, I. & Wright, M. (2011).Agency Perspectives on Corporate Governance in Kenyan companies. Corporate Governance:An international Review, 107-125.
  10. Kipngeno, R. (2015). Effects Of Corporate Governance On the Share Price of Companies Listed At Nairobi Security Exchange. Nairobi.: Unpublishe Masters Thesis at University of Nairobi, Kenya.
  11. Basyith, A., Fauzi, F., & Idris, M. (2015). The impact of Board Structure And Ownership Structure On Firm Performance:An Evidence From Blue Chip Firms Listed In Indonesian Stock Exchange. Corporate Ownership and Control, 344-352.
  12. Zulkafil, A. A., & Abdul, S. M. (2010). Board Structure and Firm Value:Astudty on Listed Banking Firms in the Asian Emerging Markets. International Journal Business Governance and Ethics, 157-177
  13. Amoll, O. (2015). Effect of Board of Directors Composition on Financial Performance of Companies Listed In Nairobi Securities Exchange. Nairobi: Unpublished Masters project of University of Nairobi.
  14. Creswell, J. (2014). Research Design,4th ed. New Delhi: SAGE Publications India.
  15. Kerlinger, F., & Lee, H. (2000). Foundations of behavioral research. Chicago: Wadsworth
  16. Al Manaseer, M., Al Hindawi, M., & Sartawi.I. (2012). Impact of Corporate Governance on Performance of Jordonian Banks. European Journal of Scientific Research.67(3), 349-359.