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Effect of Audit Committee Independence on the Financial Performance of Insurance Firms in Kenya

Author

Listed:
  • Hassan Bashir Ibrahim

    (Chandaria School of Business, United States International University –Africa, Nairobi, Kenya)

  • Caren Ouma

    (Chandaria School of Business, United States International University –Africa, Nairobi, Kenya)

  • Jeremiah O. Koshal

    (Chandaria School of Business, United States International University –Africa, Nairobi, Kenya)

Abstract

The aim of this study was to examine the effect of audit committee independence (ACI) on the financial performance of insurance firms in Kenya. The study analyzed data from the 55 insurance firms licensed by the Insurance Regularity Authority (IRA) in Kenya. ACI was operationalized by the number of independent directors serving in the boards of insurance firms operating in Kenya. Primary data was collected from a sample of 412 board directors, Chief Executive Officers (CEOs), Chief Finance Officers (CFOs), Audit Committee members (AUDIND) and Internal Auditors (INAUD) using a questionnaire instrument while secondary data was retrieved from audited financial reports of year 2017. Data was analyzed using descriptive and inferential statistics. Firm performance was measured by the two accounting-based measures Return on Assets (ROA) and Return on Equity (ROE). The findings from the regression analysis indicate that audit committee independence significantly and positively affects the financial performance of insurance firms in Kenya. Key Words:Audit Committee Independence, Corporate Governance, Corporate Performance

Suggested Citation

  • Hassan Bashir Ibrahim & Caren Ouma & Jeremiah O. Koshal, 2019. "Effect of Audit Committee Independence on the Financial Performance of Insurance Firms in Kenya," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 8(6), pages 15-24, October.
    • Handle: RePEc:rbs:ijbrss:v:8:y:2019:i:6:p:15-24
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    Cited by:

    1. Sunardi Sunardi & Theresia Woro Damayanti & Supramono Supramono & Yustinus Budi Hermanto, 2022. "Gender, Perception of Audits, Access to Finance, and Self-Assessed Corporate Tax Compliance," Economies, MDPI, vol. 10(3), pages 1-12, March.
    2. Nebyu Adamu Abebe & Navkiranjit Kaur Dhaliwal, 2024. "An empirical investigation of corporate governance attributes and firm performance: evidence from the ethiopian insurance industry," SN Business & Economics, Springer, vol. 4(10), pages 1-25, October.

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