Citation:

Severine Aswani, Dr. Onesmus Mutunga. "Relationship between Corporate Governance Practices and Performance of Medium Enterprises in Mombasa County, Kenya" International Research Journal of Economics and Management Studies, Vol. 2, No. 3, pp. 78-88, 2023.

Abstract:

Many elements, notably those supported by the CAMEL framework, have a significant impact on the success of SMEs. While the smaller businesses are hurting, the larger firms are thriving. Establishing a link between corporate governance practises and the performance of medium-sized businesses in Mombasa County was the main goal of this study. The agency theory, stewardship theory, stakeholder theory, and resources dependency theory served as the study's foundations. An approach to descriptive research was used in the study. In Mombasa County, 86 SMEs were used for this study. The key data used in this investigation. The association between variables was shown using descriptive and inferential statistics. Regression analysis was used to examine the relationship between corporate governance practices and performance of medium enterprises in the county of Mombasa The findings showed that there is a weak positive significant relationship between performance of medium enterprises in Mombasa County and board independence (rho=0.463). Also, there was a significant positive relationship between board size and performance of medium enterprises in Mombasa County (rho=0.618). Further, unit increase in Board Meetings, while holding other factors constant, will lead to an increase in Performance of medium enterprises in the county of Mombasa by 0.101 (p = 0.021). The frequency of board meetings also shown a favourable correlation in that as SMEs' operational efficiency increased over time, this led to better financial performance. These results were consistent with the goal of determining how corporate governance practises affected SME financial performance. According to the study's findings, authorities should strengthen their systems for ensuring that the corporate governance disclosures in annual reports are truly put into practise at the firm level rather than just being statements of good intentions. This will significantly raise the bar for corporate governance, and thus, enhance business performance. Corporate governance generally has a favourable effect on all of an organization's performance measures. The study suggests that in order to address corporate governance challenges, researchers, management, and policy creation in the SME sector need to be more open and flexible. The nuances of context that will moderate what is more appropriate and likely to be embraced in the small company sector must be interacted with and taken into account by research, management, and policy instruments of training support.

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Keywords:

Corporate governance, Financial performance, Policy Development, Mechanism.