The Mediating Effect of Strategy Implementation on the Relationship Between Corporate Governance and Performance of Firms Listed on the Nairobi Securities Exchange

Abstract

The purpose of the study was to establish the effect of strategy implementation on the relationship between corporate governance and performance of firms listed on the Nairobi Securities Exchange (NSE) The study developed a corporate governance index as a proxy for corporate governance based on the seven provisions of the recently revised Capital Markets Authority (CMA) draft code of corporate governance practices for public listed companies in Kenya, namely; board operations and control, rights of shareholders, stakeholder relations, ethics and social responsibilities, accountability, risk management and internal audit, transparency and disclosure and supervision and enforcement. The survey questionnaire was the main tool of data collection and was distributed to 56 CEOs and corporation secretaries. The response rate was 87.5%. The study found that strategy implementation mediates the relationship between corporate governance and non-financial performance of firms listed on the Nairobi Securities Exchange. The results have diverse implications for policy, practice and research.

Keywords: Corporate Governance, Mediation, CGI_ Score, Strategy Implementation, Firm Performance