AN EXAMINATION OF THE INFLUENCE OF BUSINESS REGISTRATION BY HUDUMA CENTRE IN SERVICE DELIVERY AMONGST RESIDENTS OF COUNTY OF NAKURU, KENYA

Influence of Business Registration by Huduma Centre in Service Delivery

Abstract

This study assesses the role of corporate governance on performance of commercial banks through posing a
question; what is the effect of corporate governance on the performance of listed commercial banks in Kenya?
The study was based on the stakeholder, shareholder and agency theories. The descriptive cross sectional
research design was used for this study. The descriptive cross sectional research design examines the
phenomenon at a specific point in time. The target population of this study was eleven listed commercial banks
at the Nairobi Securities Exchange (NSE). The study utilized a census sampling method to get three respondents per commercial bank. These respondents were drawn from the operations and finances departments of the bank. The study used two sets of statistics that is the descriptive statistics and inferential statistics. Using regression analysis, the study found that a unit increase in the independence of the board would lead to an increase in the organizational performance of the listed firms with other independent variables kept constant. Similarly, a unit increase in audit committee characteristics would lead to an increase in the organizational performance of the listed firms with the other independent variables kept constant. However, it was concluded that a unit increase in the board size would lead to a decrease in organizational performance of the listed firms with the other variables kept constant. The study concluded that the independence of the board of directors, audit committee characteristics and board size did not have significant influence on the performance of commercial banks listed at the NSE. The study recommends that the banks maintain the practice of having the CEO and chairman of board of directors being two different people to ensure that there is objectivity in decision-making aspects within the board of directors. This will enhance the ability of the board in monitoring the performance of the management by eliminating the conflict of interest factor. Additionally, the size of the audit committee should be emphasized to include members who display a depth of grasp of the issues and will give an impartial view on the operational aspects of the organization. This in turn will give assurance to the board on the viability of the strategies and adherence to its directives and good governance practices. Similarly, the sizes of different board committees should be moderated to limit the number of members to those that can reach a consensus. However, the sizes of these board committees should include sufficient members with expertise, experience and sufficient skills which will allow them to constructively contribute to the proposals kept before them. The study suggests that researchers examine the influence of professional experience of audit committee members and ratio of nonexecutive/executive directors on the performance of listed firms in future studies.