EFFECTS OF BOARD STRUCTURE ON ORGANIZATION PERFORMANCE: A CASE STUDY OF ALL THE LISTED ORGANIZATIONS IN THE NAIROBI SECURITIES EXCHANGE
RONO, LUCY CHEPCHIRCHIR
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There has been a renewed interest on the role of the boards in the performance of an organization due to various corporate scandals and failures. Corporate governance affects organizations‟ performance as organizations with better corporate governance guarantee increased shareholder wealth and limit the risk of the investment. The study analyzed the effects of board structure on performance of all the listed organizations on Nairobi Securities Exchange (NSE) in Kenya. The specific objectives were to determine the effects of board size on the organization performance, establish the effects of directors‟ level of education on the organization performance, and establish the influence of board members‟ experience on the organization performance and to determine the effects of board gender on the organization performance. The study employed descriptive research design. The target population was all the listed organizations in the Nairobi Securities Exchange for the period of three years from 2014 to 2016. Secondary data sources was used for the study, where annual financial reports of individual listed firms‟ was extracted and return on asset (ROA) was used as a measure of organizations performance. After data collection, regression analysis was used to estimate the relationship between the variables and the data was analyzed using Statistical Package for Social Sciences (SPSS). The study found that firm performance based on the return on assets in the overall regression model is significant except for education level of directors. This means that the independent variables of board size, experience of the directors and gender of the directors are important predictors of organization performance. The study also revealed a positive correlation between all the four variables and organization performance. The study conclusion make is it clear that board structure diversity is a fundamental corporate governance element. The study recommends that a lot needs to be done to enhance individuals selected as directors in terms of their board size, average period of experience, gender and education level.