EFFECTS OF CORPORATE GOVERNANCE ON THE VALUE OF SELECTED FIRMS QUOTED AT THE NAIROBI SECURITY EXCHANGE KENYA.

Abstract

In the wake of recent corporate scandals. It is observed that the value of the firm keeps on changing for the worse, the question is; could it be as a result of corporate governance? .This study therefore looked at the effects of corporate governance on the value of firms quoted at the Nairobi Security Exchange in Kenya value of the firm. The study adopted diagnostic research design, a sample of 49 quoted companies were selected through stratified and simple sampling designs. Data was analyzed through inferential statistics which involved testing of hypotheses using simple regression model at 95% confidence level, descriptive statistics were also used, which included the use of frequencies and percentage. Data was presented by use of tables and charts. Findings of the study showed that overall level of adoption of the corporate governance stood at 73%. Findings also indicated that individual measures of corporate governance did not affect the value of the firm individually ,except board accountability that had an influence on value of the firm measured by ROA, aggregated governance index was had a significant effect(p<0.05), findings also show that size of the firm affected value of the firm, it was concluded that the most implemented measure of corporate governance was shareholders and the least implemented measure of corporate governance is corporate behavior. It was concluded that measures of corporate governance individually did not affect value of the firm but when aggregated they affected value of the firms. The study recommended that board accountability be improved by strengthening the regulatory authority also it is recommended share holders rights to be taken seriously to avoid agency principle conflicts, executive remuneration be moderate for better performance, disclosure and internal control be done effectively, activities relating to take -over‟s must be sanctioned by investors and corporate behavior must be nurtured in a predictable way for performance.