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The Effects of Ownership and Corporate Governance Reforms on Efficiency of Privatized Companies in Kenya

Author

Listed:
  • Esther Wanjugu Gitundu

    (Division of Research and Extension, Egerton University, P.O. Box 536-20115, Egerton, Kenya)

  • Sifunjo E. Kisaka

    (Department of Finance and Accounting, University of Nairobi, P.O. Box 30197-00100, Nairobi, Kenya)

  • Symon Kibet Kiprop

    (Department of Economics, Egerton University P.O. Box, 536-20115, Egerton, Kenya)

  • Lawrence Kangogo Kibet

    (Department of Economics, Egerton University P.O. Box, 536-20115, Egerton, Kenya)

Abstract

This study investigated the effects of ownership and corporate governance reforms on efficiency of privatized companies in Kenya for the period 2007-2013. Data was extracted from financial reports. A unit root test examined stationarity of data. A fixed effects (FE) regression model with a robust standard error option was used to control for firm specific effects which could bias results. The results indicate government ownership has a negative effect on cost and technical efficiency. Local institutional investors influence technical efficiency positively. Large individual shareholders have a positive influence on cost efficiency while dispersed ownership influence cost efficiency negatively. Both non-executive and women directors influence cost efficiency positively. This study recommends further reduction of state and dispersed ownership to pass more ownership and control to institutional investors. Diversity in corporate boards should be enhanced to enable firms to attract managerial and technical expertise from the non-executive and women directors.

Suggested Citation

  • Esther Wanjugu Gitundu & Sifunjo E. Kisaka & Symon Kibet Kiprop & Lawrence Kangogo Kibet, 2016. "The Effects of Ownership and Corporate Governance Reforms on Efficiency of Privatized Companies in Kenya," International Journal of Economics and Financial Issues, Econjournals, vol. 6(1), pages 323-331.
    • Handle: RePEc:eco:journ1:2016-01-42
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    References listed on IDEAS

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    Cited by:

    1. Agaba Sedrick Echongu & Dr. Elias Njagi, 2022. "Influence of Organization Capabilities on the Performance of Commercial State Corporations in Kenya," International Journal of Science and Business, IJSAB International, vol. 15(1), pages 167-178.
    2. Nguyen, Thi Hong Hanh & Ntim, Collins G. & Malagila, John K., 2020. "Women on corporate boards and corporate financial and non-financial performance: A systematic literature review and future research agenda," International Review of Financial Analysis, Elsevier, vol. 71(C).

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    More about this item

    Keywords

    Privatization; State Owned Enterprises; Efficiency;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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