CORPORATE GOVERNANCE AND FINANCIAL PERFORMANCE OF DEPOSIT TAKING SACCOs IN NAKURU COUNTY, KENYA
CORPORATE GOVERNANCE AND FINANCIAL PERFORMANCE OF DEPOSIT TAKING SACCOs IN NAKURU COUNTY, KENYA
Muthee, L. W. - MBA Student, Kenyatta University, Kenya
Theuri, J. M. - Lecturer, Kenyatta University, Kenya
ABSTRACT
Corporate governance is very important in the functioning of an organization and includes direction, control, authority, stewardship and accountability. Financial performance shows the health of an organization financially over a given period of time. The study established the effect of corporate governance on the financial performance of deposit taking SACCOs in Nakuru County. Specifically, this research established the effect of board size, board diversity, transparency and disclosure effect on the performance of DT-SACCOs in Nakuru County. Descriptive research design was applied while the target population was fourteen DT-SACCOs operating in Nakuru County. To collect qualitative data, questionnaires were used whereas quantitative data of each SACCO was collected from SASRA reports available in their website for a period of five years. Descriptive statistics and inferential statistics specifically the multiple regressions analyzed qualitative data. Results showed that 52.6% of the SACCOs had board members between 10 and 12, 63.2% of the respondents showed that more than 10 of their board members were shareholders, 52.6% of the respondents showed that less than 5 of their board members were non-shareholders while 71.1% indicated that board members between 6 and 10 were outside directors. 42.1% of the respondents denoted that female board members in their SACCO were less than 3 with 31.6% of board members being finance specialists. All the respondents indicated that their SACCOs disclose the financial information and that the information is published in the SACCOs website. Results further showed that 68.4% of the respondents denoted that their SACCOs disclose the information annually. Mean summaries of the board size, board diversity, transparency and disclosure statements showed that respondents agreed to a large extent that corporate governance variable studied affected financial performance of DT-SACCOs in Nakuru County. Results further showed that that the linear correlation between the board size, board diversity and financial performance was positive and insignificant. The linear correlation between the financial performance and transparency and disclosure was negative and insignificant. The study concluded that board diversity is a key factor of performance of deposit taking-SACCOs in Nakuru County as it affected the financial performance of DT-SACCOs significantly and recommends diversification of the board with different professionals to boost their financial performance.
