Effect of Corporate Governance on the Financial Performance of Companies Listed at Nairobi Securities Exchange

It is the responsibility of every corporation to ensure at all times good corporate governance practices since they are associated with high stakeholders returns. When entities uphold good moral business practices, they ensure the protection of the stakeholders rights, effective monitoring of management decisions and ensuring that all disclosures are made by the business entities as desired by the stakeholders. This study sought to determine the effect of corporate governance on the financial performance of the companies listed at the Nairobi Securities Exchange. The study was for a five-year period from 2013 to 2017. The study involved the use of a descriptive research design using a sample of 20 companies listed at the NSE. Secondary data from the audited financial statements of the listed companies and the NSE's reports were used. Data was analyzed on the basis of the mean and the F test statistic was computed at 5% significance by regression analysis. From the findings, the F statistic was 2.614 and was found to be significant, board size had a t-value of -0.109 which was insignificant, board gender diversity had a t-value of 2.770 which was significant, company size had a t-value of -0.004 which was insignificant, leverage had a t-value of 1.456 which was insignificant and size of audit committee had a t-value of 1.623 which was insignificant. The study concluded that corporate governance affects the financial performance of the companies listed at the Nairobi Securities Exchange. The study recommends that companies should at all times uphold good corporate values since they are the major determinant for the success of business entities, firms should also ensure equal gender representation which translates to transparency in the management of the companies.