Influence of corporate governance on performance of water companies in Kenya:

Abstract

There has been increased awareness on the concept of Corporate Governance and its effect on performance of public and private companies. This has been enhanced by the disclosure of major scandals affecting the corporate level of organizations leading to collapse or near collapse of large corporations. Corporate Governance helps to strike a balance between the interest of the management and those of other stakeholders. Water sector however has been on the fore front for consideration due to the nature of the industry’s core business. This is because water is a basic commodity and its scarcity threatens the very nature of human kind. The performance of this sector is therefore of great importance to the Nation. Against this basis, this study sought to establish the influence of corporate governance on performance of water service providers. The specific objectives of this study sought to determine the influence of board structure, strategic roles of the board, corporate leadership and board independence on performance of Machakos Water and Sewer-age Company Limited. The study used descriptive research design employed on sixty respondents who were drawn from a target population of eighty five employees of the company. The respondents were selected from all cadres within the company. Stratified random sampling technique was used. The study used both primary and secondary data. Questionnaires were used for primary data collection. The secondary data was obtained from water sector published and unpublished reports. Drop and pick method was used to disseminate the questionnaires. Data was descriptively analysed and presented using percentages, measures of central tendencies, frequency distribution tables, figures and multiple regression analysis model. SPSS was used for analysis. The study established that there is gender parity in the company, the respondents were aware of the existence of the board and they viewed it to be of great importance. It sought to identify the relationship between the board structure, strategic roles of the board, corporate leadership and board independence of the overall performance of the company. It was found out that there was a statistical significance between the predictors and performance. Further, it was realized that strategic roles of the board had the greatest effect on performance accounting to 0.633 of the overall performance. On the indicators of performance used, the study established that the company had improved greatly on revenue growth with the highest rating of 4.12 compared to others. Out of the inferences drawn the researcher concluded that companies need to exploit the strategic roles of the board since it has the greatest and instant effect on performance.