Business Case for Corporate Transparency: Evidence from Kenya

With increasing trend of corporate scandals and corporate failure, stakeholders are demanding access to information, transparency and accountability. In response to these demands, corporate governance guidelines all over the world prescribe for corporate transparency and disclosure of information especially among public listed firms. Drawing from agency theory and stakeholder theory, we argue that corporate boards have a responsibility to disclose material information to stakeholders in order to facilitate decision making and hence improve firm performance. This study investigates business case of corporate transparency in Kenya. Applying Fixed Effects regression model on data from 42 listed firms in Nairobi Securities Exchange for the period 2005-2010, we found that indeed corporate transparency has a positive and significant effect on firm performance. The results have important policy implications on corporate disclosures in Kenya. Keywords: Corporate Transparency, Accountability, Corporate Governance, Kenya

Small and Medium Size Manufacturing Enterprises Growth and Work Ethics in Kenya

Developing countries are facing a formidable unemployment challenge due to a combined effect of slow economic growth and rapid increase in population. In Kenya, Economic Recovery Strategy (ERS) estimates that 500,000 jobs would be created annually with 88% of these generated by small and medium size enterprises. Yet, the attrition level is alarming. It has been shown that for every 100 new enterprises started in a year, 60 percent close down within the first year, and those that survive the first year, 40% are likely to close in the second year (Kenya 1998; 1999). The question that begs answers is, why so? One untested theory has been unfair competition and unethical behavior of the small and medium enterprises. This leads to low confidence, and trust and difficulties in sustaining customers as well as establishing long lasting networks. This study explores the extent to which SME’s embrace business work ethic. It seeks to answer questions as to how much the growth of SMEs is affected by work ethics or lack of it. The study employed expost facto survey design among small manufacturing enterprises in Eldoret Municipality with respondents sampled through proportionate random sampling in clusters based on geographical location. This paper measures the perception of the entrepreneurs on the relative importance of ethical practices and social responsibility in business.  It goes further to highlight core competencies that can be leveraged to prepare small and medium size manufacturing enterprises engage in ethical practices

Influence of Entrepreneurial Disposition on the Performance of Female-Operated Enterprises in Kenya

The main focus of this study is to determine the influence of entrepreneurial disposition on the performance of women operated enterprises in Eldoret Municipality. The study used a survey of 175 female operated enterprises drawn from Huruma, Langas and the Central Business District of Eldoret Municipality.  Quantitative data was collected using a questionnaire and analysed using descriptive statistics, while qualitative data was collected using interviews of key informants and case studies. It was found that the decision to become entrepreneurs is determined by people other than women themselves.  Women choose businesses which reflect the traditional gender roles. They keep records but lack the necessary skills to enable them to keep adequate records.  The majority of women hold separate business and personal accounts so as not to mix business and personal money and for most of them success in business comes due to personal qualities such as hard work, commitment and dedication to work. Consequently, we conclude that pushed into business by circumstances beyond them, and so to grow their businesses, they need to redefine their situation so that they see business as a means to greater prosperity for them and their families. Key Words: Business Performance, Entrepreneurship, Entrepreneurial Disposition, Women Entrepreneurs

Macroeconomic Determinants of Stock Market Development in Emerging Markets: Evidence from Kenya

We examine macro-economic determinants of stock market development in Kenya for the period 2000 to 2009, using quarterly secondary data. The hypothesis on the existence of a co-integrated relationship between stock market development and macro-economic determinants is tested using Johansen-Julius co-integration technique. While an error correction model is used in estimating the relationship between macroeconomic variables, on the one hand, and stock market development on the other. The results indicate that macro-economic factors such as income level, banking sector development and stock market liquidity are important determinants of the development of the Nairobi Stock market. The results also show that macro-economic stability is not a significant predictor of the development of the securities market. Keywords: Stock market, macroeconomic factors, Keny

Strategy Implementation and Firm Performance among Manufacturing Firms in Kenya

This study was carried out to investigate the relationship between strategy implementation and firm performance among Kenyan manufacturing firms. The study targeted the manufacturing firms which are registered with Kenya Association of Manufacturers. Primary data was collected by use of structured questionnaires that were distributed to the CEOs and Managers. Out of 300 questionnaires that were distributed to the respondents, 264 datasets were returned and were all used for data analysis. Study results indicate that there is a significant relationship between strategy implementation and firm performance of the manufacturing firms. The study therefore concludes that strategy implementation has a greater effect on firm performance in Kenyan manufacturing firms. Keywords: Strategy Implementation, Firm Performanc

Modeling Employee Social Responsibility as an Antecedent to Competitiveness Outcomes

The study explained a model of employee social responsibility (ESR) as an antecedent to corporate competitiveness. It hypothesizes that ESR has significant effect on employee competitiveness (EC). Questionnaires were administered to a sample of 700 employees selected from a population of 5,595 from 20 classified hotels in the coastal region of Kenya using proportionate and systematic random sampling methods. Structural equation model was used for model specification and hypotheses testing. Confirmatory factor analysis was performed on six and four constructs representing ESR and EC, respectively. Overall, a negative effect of ESR on EC was found with un-standardized β estimates = −.516; SE = .071, p = .000. Accordingly, increase in employee corporate social responsibility (CSR) is associated with decline in EC. This was potentially paradoxical because employees demonstrated job and organization commitment and retention intention despite poor ESR practices

Effect of Chief Executive Officer’s Characteristics on Capital Structure of Publicly Listed Firms in Kenya

Based on a panel of publicly listed firms in Kenya over the period of 2008 to 2014, we examined if Chief Executive Officer’s Characteristics affects capital structure. CEO tenure, CEO gender and CEO age and CEO education were used as independent variables while the capital structure was used as the dependent variable of the study. The study used upper echelon theory, trade-off theory and agency theory. Majorly, descriptive statistics, Pearson correlation analysis and panel regressions were performed. Panel regression analysis was used to determine the effect of CEO characteristics on capital structure. CEO tenure had a negative and significant effect on capital structure, CEO age had a positive and significant effect on the capital structure, CEO gender and CEO education indicated a negative and significant effect on capital structure respectively. The study indicates that there is an association between CEO characteristics and capital structure of listed firms in Kenya. It is therefore instrumental for firms to appoint their CEOs based on the duration they have served the company, CEOs to sit in their position for a longer period of time and those who have the requisite knowledge and experience hence they can be tasked with making important decisions pertaining firms' financing. Keywords: capital structure, CEO characteristics, Upper Echelon Theory, Trade-Off Theory, panel data and Agency Theory DOI: 10.7176/RJFA/11-18-07 Publication date:September 30th 202