The relationship between board structure and board compensation on financial performance for companies listed at the Nairobi stock

Abstract

This study set out to determine the relationship between board structure and board compensation on financial performance for companies listed at the Nairobi Stock Exchange (NSE). Financial reports for listed companies were obtained from Nairobi stock exchange for the years 2006 to 2010. From the data extracted from the financial reports, multiple regression analysis was performed with the aid of a statistical package (SPSS) to establish the relationship between board structure and board compensation and performance measures i.e. Return on assets (ROA), Return on equity (ROE) and Profit. The regression results displayed no significant relationship between Board size and Board composition and performance measures while there was significant relationship between Board compensation and firms performance for companies listed at Nairobi stock exchange.