Corporate Governance Practices In Middle Level Colleges In Nairobi Central Business District, Kenya

Abstract

This research project addresses corporate governance practices in middle level colleges in Nairobi Central Business District, Kenya. It gives a more explicit exposition of the board of directors and Chief Executive Officer of the institution in relation to corporate governance practices. It then goes on to address some of the underlying facts that promote efficient corporate governance practices, and examines some of the duality of chief executive officers in the institutions. In addition it also provides the information on ownership of the institutions and the sizes of the board of directors in the institutions. The document also provides a survey of the audit committees in the colleges on the link to corporate governance practices and management of the colleges. One of the most striking differences between countries’ corporate governance systems is the difference in the ownership and control of firms that exist across countries. Systems of corporate governance can be distinguished according to the degree of ownership and control and the identity of controlling shareholders. Effective corporate governance requires a clear understanding of the respective roles of the board and of senior management and their relationships with others in the corporate structure. The relationships of the board and management with shareholders should be characterized by frankness; their relationships with employees should be characterized by fairness; their relationships with the communities in which they operate should be characterized by good citizenship; and their relationships with the government should be characterized by a commitment to compliance. Senior management, led by the chief executive officer, is responsible for running the day-to-day operations of the corporation and properly informing the board of the status of such operations. Management’s responsibilities include strategic planning, risk management, and financial reporting. The board of directors has the important role of overseeing management performance on behalf of shareholders. Its primary duties are to select and oversee a well-qualified and ethical CEO who, with the senior management, runs the corporation on a daily basis, and to monitor management’s performance and adherence to corporate standards. Effective corporate directors are diligent monitors, but not managers, of business operations. Good corporate governance seeks to promote: effective and sustainable corporations that contribute to the welfare of society by creating wealth, employment and solutions to emerging challenge. Responsive and accountable corporations, legitimate corporations that are managed with integrity, probity and transparency, recognition and protection of stakeholders’ rights, an inclusive approach based on democratic ideals, legitimate representation and participation. Governance is concerned with the processes, systems, practices and procedures – the formal and informal rules – that govern institutions, the manner in which these rules and regulations are applied and followed, the relationships that these rules and regulations determine or create, and the nature of those relationships. Essentially, governance addresses the relationship role in the institutional framework. Corporate governance, therefore, refers to the manner in which the power of a corporation is exercised in the stewardship of the corporation’s total portfolio of assets and resources with the objective of maintaining and increasing shareholder value and satisfaction of other stakeholders in the context of its corporate mission.