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CORPORATE GOVERNANCE AND FINANCIAL PERFORMANCE OF MOBILE SERVICE PROVIDERS IN KENYA: A CASE OF AIRTEL KENYA LTD

Adan Billow Mohamed, Mr. Gerald Atheru

Abstract


Purpose:  The purpose of the study was to determine the effect of corporate governance on financial performance of mobile service providers in Kenya in the case of Airtel Kenya.

Methodology: The study adopted a descriptive research design where a case study was conducted. The target population comprised of all the 96 employees in the top and middle level management working with Airtel Kenya Ltd within Nairobi. The study used primary data collected using a questionnaire. The study used multiple regression analysis. The statistical software used to run the multiple regression was SPSS.

Results: The study findings revealed that board members’ experience, their educational qualifications and board ethnic diversity had a positive and significant effect on the financial performance of the firm. Board size, however was found to have a negative but significant effect on the financial performance of the firm. Board gender diversity though had a positive effect on the financial performance of the firm; this effect was found to be insignificant. Financial leverage was also found to moderate the relationship between corporate governance and financial performance of the firm.

Unique contribution to theory, practice and policy: Based on the responses given by the individuals in the two management levels participating in the study, it was recommended that if Airtel Kenya Ltd was to improve their financial performance which had not been impressive, they needed to place key emphasis on the characteristics of their board for efficiency and effectiveness. The management had to ensure that they limited the amount of debts of the firm.



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Keywords


corporate governance, board characteristics, financial performance, mobile service providers

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