Impact of public finance management reforms on financial performance of commercial state owned enterprises in Kenya

Abstract

The purpose of this study was to determine the impact of public finance management reforms on the financial performance of Commercial State Owned Enterprises in Kenya. The objectives of the study were to determine the impact of the Public Finance Management Reforms on the financial performance of Commercial State Owned Enterprises in Kenya and to undertake a comprehensive stock-taking, review and synthesis of lesson about designing, implementing and assessing public financial management (PFM) reform initiatives amongst Commercial State Owned Enterprises in Kenya. The study adopted a descriptive survey research design in which a sample of 30 out of the 168 commercial state enterprises were targeted. Secondary data was also used in the study. The study used descriptive statistics such as frequency, percentages, mean and standard deviation to show the distribution of responses inferential statistics, regression in particular was used to show the relationship between the dependent and the independent variables. The study findings revealed that the respondents indicated that the credibility of the organizations budgets influenced the financial performance of the organization to a great extent. The findings further show that according to respondents, the comprehensiveness and transparency of the budget impacted the financial performance of the organization to a great extent. The results also show that the respondents indicated that the predictability and control in budget execution impacted the financial performance of the organization to a great extent. The results revealed that according to the respondents, the external scrutiny and audit influenced the financial performance of the organization to a great extent. The respondents further stated that the policy based budgeting in the organization influenced the financial performance of the organization to a very great extent. From the study findings, respondents indicate that both the accounting, recording and reporting and donor practices impacted the financial performance of the organization to a great extent. The study recommended that the government should expand the implementation in PFM reforms in other state corporation so as to enhance their financial performance, the effect of some variables such as comprehensiveness and transparency in the budget and external scrutiny and audit did not have a strong influence on the financial performance of the organization despite showing potential and the government should strengthen such factors as credibility of the budget, policy based budget and donor practices for sustainability of the profitability of the organizations.