Corporate governance at Equity Bank LTD, Kenya

Abstract

The purpose of this study is primarily based on establishing the nature of corporate governance at equity Bank Ltd. The overriding philosophy which agitates the study on this particular organization is because the company in question invariably one of the well performing banks in the region. Additionally, Equity Bank Limited just like other companies have been constraint with corporate governance issues arising from shareholders, customers complaint of exploitations of workers by using contract staff as against direct engagement of workers that would be remunerated according to their condition of service. Previous researches into the subject have brought to light the poor governance of so many banks having indebted accounts in banking industry. Their accounting systems do not reflect the company’s financial status.The objective of this study was to determine the corporate governance at Equity Bank Ltd and how they influenced its performance. This study was anchored on four theories; agency theory, stewardship theory, stakeholder’s theory and resource dependency theory. The research study design was conducted using a case study. The study used both primary and secondary data. The primary data was collected through conducting of face to face interviews with the top level management Secondary data was obtained from relevant literature review from dissertations, corporate governance journals, magazines and the any other previous research. Data analysis was conducted using content analysis, however in this study; all the disclosure matters were given same weightiness which helped to lessen partiality. Additionally, authority placed a higher importance on certain pillars and practices of corporate governance. From the study it is clear that corporate governance practices have substantial effect on performance. This study recommends exploring the influence of external governance practices on performance. Based on the findings of this research, we therefore present the following recommendations which will be useful to stakeholders. Efforts to improve corporate governance should focus on board size, composition and independence, Board structure, audit committees, Shareholders and internal control, since it is positively related to both future operating performance and to the probability of disciplinary management turnover in poorly performing banks. Steps should also be taken for obligatory passivity with the code of corporate governance. Additionally there is the need to set up an incorporate corporate body encumbered with the responsibility of collecting and organizing corporate governance related data and creating the relevant indices to enable corporate governance research in the banking sector.In conclusion, corporate governance plays a vital role in the success and prosperity of the banks and other business firms. The interview results show further that the direction and the extent of firm’s performance is dependent on the predictors being examined. Results show that large corporate practices, policies and rights of shareholders enhance corporate performance and that when such factors are exploited, it improves firm value. The results of the study may be taken as a indication that good governance structure is vital in the young and not fully formed financial institutions as it has an influence on the institution performance. The opinions of the study do not only aim at perfecting governance at equity bank in terms of policy direction, but equally important to ensure collapse of Commercial banks as a result of governance is forestalled so as not to dent the critical process of poverty reduction and development.