Corporate governance and the financial performance of state corporations: The case of new Kenya Cooperative Creameries (KCC)

Abstract

Good Corporate Governance is a major focus in the management of organizations and in particular where financial performance is of great concern. This is because owners of organizations want to get value from their investments; society wants service from state corporations. This study narrowed down to Corporate Governance and the Financial Performance of the New Kenya Cooperative Creameries. It looked into the Board of Directors role in Governance of the state corporation who are also mandated to oversee the running of the corporation. The study sought to determine and asses the corporate governance systems and practices in place and the financial performance of the corporation. The study established that the Board of New Kenya Cooperative Creameries adopted practices of good corporate governance which were reviewed and improved over time and had yielded improved financial performance. Some of the corporate governance principles that were identified include appointment and leadership of the Board, structure of the organization, purpose and values, balance of power in the Board, corporate communication, assessment of performance of the Board, responsibility to stakeholders and social and environment responsibility. Though some practices of good corporate governance were found and have yielded improved financial performance, there is need for more structured mechanisms of handling various issues that arise. The relationship between the Board and the management needs to be continuously monitored to ensure that the corporation remains cordial to realize the mission and objectives set out.