Corporate governance and firm value for firms listed at the Nairobi securities exchange

Abstract

The study focused on corporate governance and firm value of firms listed at the Nairobi Securities Exchange. The study sought to find out the relationship between corporate governance attributes of board size, board composition, CEO duality, and audit committee composition compared against measures of firm value such as Return on Assets and Market to book values of quoted firms. The data was analyzed using regression analysis to build the relationship between corporate governance attributes and firm value. Descriptive research methodology was adopted. The study found that corporate governance attributes have a significant influence on Return on Assets while corporate governance attributes have an insignificant influence on Market to book value ratio as measures of firm value. However, audit committee as a corporate governance attribute significantly stood to influence both Returns on Assets and Market to book value ratio as measures of firm value. This depicts the idea of more external members in the audit committee than insider ones thus enhancing corporate governance through external independent directors and brings new dimension for effective running of a corporate entity thereby propelling a firm’s corporate entrepreneurship and competitiveness.