Abstract

This study aimed at establishing the effect of corporate governance on performance of commercial state corporations in Kenya. Corporate governance is the scheme through which firms are managed, measured, and made accountable. Corporate governance plays a key part in accomplishment of a firm because it outlines modalities of achieving social and financial objectives. The main objective of the study was to determine the influence of corporate governance on performance of commercial state corporations in Kenya. Hypothesis was formulated to address this objective. The study adopted a cross sectional descriptive survey design, using a sample of 47 commercial state corporations. Commercial state corporations are income generating entities, managed by management board and governed by best practices of governance. The study revealed that corporate governance accounted for 55.3 percent (R² = 0.553) of variation in non-financial performance and 39 percent (R² = 0.39) of variation in financial performance amongst commercial state corporations in Kenya. The study found that corporate governance positively influences the performance of commercial state corporations in Kenya. More specific for every one-unit increase in corporate governance non-financial performance increases by 0.717 units (β = 0.717) holding other factors constant while financial performance increases by 0.801 units’ (β = 0.801) other factors held constant. This positive relationship was significant (P-value = .000<.05).  The results of this study have contributed to theory and better understanding of the antecedents of corporate governance providing reference for further research. It is recommended that organizations improve corporate governance and recognize the combination of antecedents of corporate governance.

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