EFFECT OF CORPORATE GOVERNANCE ON PERFORMANCE OF KENYA’S STATE CORPORATIONS IN MOMBASA COUNTY; A CASE OF KENYA FERRY SERVICES LIMITED

Abstract

The objective of the research was the determination of the effect corporate governance has on the
performance of State Corporation in Kenya’s marine sector in Mombasa County, specifically a
study of Kenya Ferry Services Limited. The specific objectives of the research were; to
determine board characteristics’ effect on Kenya Ferry Services Ltd performance in Mombasa
County, explore corporate board composition’s effect on Kenya Ferry Services Ltd performance
in Mombasa County, identify the audit committee of the board’s effect on Kenya Ferry Services
Limited performance in Mombasa County and assess corporate board size effect on Kenya Ferry
Services Ltd performance in Mombasa County. As regards the theoretical frame work, the study
consisted of agency theory, resource dependency theory and stakeholder’s theory. This research
adopted a cross-sectional survey design, which was aimed at collecting large numbers of
quantitative data geared towards addressing the formulated hypotheses. Stratified random
sampling technique was used to come up with the sample size of 171 from300 respondents in
Kenya Ferry Services Limited. Primary data was collected via self-administered structured
questionnaires that were distributed through the drop and collect method. Cross validation of the
primary data results was done through the collected secondary data. The analysis of data
collected was done quantitatively. Both analysis of descriptive and inferential statistics was
conducted by use of Statistical Package for Social Sciences (SPSS) version 24, specifically the
multiple regression model for hypotheses testing. The mean Standard Deviation, Percentages and
Co-efficient of variations used to describe the set of data and the presentation was by way of
tables, charts and graphs. The study revealed that board characteristics had no significant effect
on corporate performance of Kenya Ferry Services in Mombasa County. Corporate board
composition had a statistically significant effect on corporate performance of Kenya Ferry
Services in Mombasa County. Board audit committee had a statistically significant effect on
corporate performance of Kenya Ferry Services in Mombasa County. Corporate board size had
no significant effect on corporate performance of Kenya Ferry Services in Mombasa County.
The study recommended that government of Kenya under relevant authorities should formulate
policies or enforce existing policy to make sure that all the state corporations have boards that
are very transparent in all their undertaking and operations to ensure high performance. The State
Corporation should ensure that they have policies in place to ensure formulation of balanced
boards in terms of both executive and non-executive directors