Board Structure and Firm Performance: Evidence from State Owned Enterprises in Kenya

Abstract

The study examines the relationship between board structure and firm performance in the state owned enterprises in Kenya. Data was collected from 25 state owned enterprises in the commercial and manufacturing sector covering the period 2014 to 2016.  To establish the relationship between the variables the study employed panel data regression, with fixed and random effects. The study findings established that board size had a positive and significant effect on firm performance. In contrast board independence had negative and significant effect on firm performance. The study findings indicate that that large boards improved firm performance while board independence had a negative impact on firm performance. Results for control variables firm size and firm age were positive and statistically significant. The findings from this study contributes to literature in corporate governance in public sector where comparatively empirical evidence is limited. The findings will prove useful in guiding policy in corporate governance practices in the public sector in Kenya.

Keywords: Corporate governance, Board size, board independence, Firm Performance, State Owned enterprises.

DOI: 10.7176/RJFA/11-16-04

Publication date:August 31^st 2020