The Link Between Corporate Governance Failure and the Collapse of Major Private Companies in Kenya

Abstract

This study investigates the link between corporate governance failure and the collapse of major private companies. The study argues that, although the government has held trainings and several campaigns aimed at having major organizations embrace the concept of corporate governance, nevertheless major companies in the private sector are still collapsing because implementation and practice of corporate governance is much emphasized on state corporations and public listed companies and rarely in the private sector. Researchers have paid great attention to the impact of corporate governance on state corporations and public companies and have left very little to no knowledge about the relationship between corporate governance and the collapse of major private companies as well as the absence of knowledge about how the collapse is related to corporate governance failure. This study aims to conceptualize, problematize and theorise private companies practices and establish whether the massive collapse of the major private companies is due to lack of elements of corporate governance. The study utilizes a mixed method approach and relies on doctrinal, historical and case study methods in order to test the hypothesis. The theories relied on include the Stewardship theory, Stakeholder theory and the Agency Theory as they demonstrate that a company's leadership is largely affected by the governance structure of the company. The behaviour informs the outcome of any corporation. The study concludes that the collapse of private companies is due to corporate governance failure in the day to day running of the company.