Relationship between corporate governance structures and performance of insurance companies in Kenya

Abstract

This paper investigates whether corporate governance affects performance of Insurance companies in Kenya. Data on corporate governance characteristics and performance are constructed and regression analysis performed. The study includes five specific corporate governance characteristics. Thirty-three insurance companies were examined to establish the relationship between corporate governance and performance, This research find evidence that the size of the board and insider holding on one hand have an association with performance but does not form any evidence that the external board, individual shareholding and institutional shareholding have any influence on performance. It thus supports the commonly held view in the literature that the small size of the board has a positive effect on performance. The negative relationship found in this research between performance and the number of external directors may be a peculiar one in Kenya for it is not consistent with the many past research findings. However, specific corporate governance features found in the insurance industry in Kenya play an important role in determining performance. The conclusion is that the size of the board and insider holding on one hand have an association with performance but does not find any evidence that external board, individual holding and institutional holding have any influence on performance of insurance companies.