scholarly journals Board Characteristics and Capital Structure Decisions of Commercial Banks in Kenya

2021 ◽  
Vol 3 (2) ◽  
pp. 129-143
Author(s):  
Hiltommy Muthiani Mulwa ◽  
Fredrick Ndede
Keyword(s):  
Capital Structure ◽  
Commercial Banks ◽  
Reliability And Validity ◽  
Primary Data ◽  
Board Independence ◽  
Strong Positive Correlation ◽  
Board Diversity ◽  
Board Characteristics ◽  
Inferential Analysis ◽  
The Right

Organizations in the modern society are faced with numerous challenges that require those in charge with governance to make effective decisions that enhance organizations’ overall performance and sustainability. One of the key decisions an organization’s board ought to make involve capital structure. Despite various research that have been conducted relating to board characteristics and capital structure, several authors concurs that the manner in which banks select the best capital structure, and the factors that influence their corporate financing behavior are not well understood. The main aim of this study therefore was to investigate board characteristics and capital structure decisions of commercial banks in Kenya. The study measured board characteristics with respect to board size, board diversity, board independence and board expertise while the capital structure decisions was gauged with capital structure ratio, that is, total debt ratio. These dimensions also formed the specific objectives of the study. The study assessed various literatures covering both theoretical and empirical that elaborates on the study variables providing more insight as well as identified gaps that needed to be filled. The study employed correlation design as it strived to demonstrate the causative connection between study variables. All selected commercial banks formed the target population with chief finance officers and internal auditors being the target respondents in these banks. The primary source of information was both primary and secondary data of this study whereby primary data collection instrument was the questionnaire whose reliability and validity was ensured before collecting data. Collected data was properly assessed and checked before conducting final analysis. Data was analyzed using descriptive and inferential analysis, which was aided by statistical package for social science and the outputs were presented in form of graphs, pie charts, frequency tables and narrations. The findings of the study showed a strong positive correlation between all the study measures as shown by R value of 0.824. From inferential analysis findings, the study concludes that on the overall all the board of directors’ characteristics studied had a significant influence on capital structure decisions of commercial banks in Kenya. The regression coefficients p-values were 0.000, 0.000, 0.002 and 0.001 consecutively which were all less than 0.05 indicating a significant relationship between board characteristics dimensions studied and capital structure decisions; therefore, all the null hypotheses were rejected. The study also established that capital structure of commercial banks in Kenya over a period of 5 years between 2013 and 2017 averaged at 0.841 which was less than 1.00, indicating that these banks finance their assets using equity as opposed to debts. As a result, the study concluded that board characteristics have a significant impact on capital structure decisions made by Kenyan commercial banks. Furthermore, commercial banks in Kenya regard financial flexibility as more important than the tax shelter advantage, implying aversion to debt and a proclivity to follow an inverted pecking order when it comes to external funds. The study therefore recommends that banks’ board and management should manage debt and equity levels rationally to enhance their performance; banks should select the right size of board with the right mix of expertise and diversity who will be able to monitor the management but will not interfere with or infringe on capital structure decisions; banks should also increase board independence in order to benefit from the skills and expatriates of these board members; and finally a selection of banks’ board with divergent skills and qualifications so that banks can reap from the heterogeneity of educational backgrounds and competences.

scholarly journals Board Composition and Dividend Decisions of Companies Listed at the Nairobi Securities Exchange Kenya

2019 ◽  
Vol 3 (VI) ◽  
pp. 354-371
Author(s):  
Jackline Naburi ◽  
Fredrick Ndede
Keyword(s):  
Listed Companies ◽  
Primary Data ◽  
Board Composition ◽  
Board Independence ◽  
Top Management ◽  
Board Diversity ◽  
Dividend Payout ◽  
Independent Variables ◽  
Management Staff ◽  
Retained Earnings

Boards play a vital role in the field of corporate governance in corporate by acting as the overall governing body on all affairs of an organization. Dividend decisions determine the amount of retained earnings that serve as an internal source of finance for most listed companies. The main purpose of this study was to determine how board composition affected dividend decisions of companies listed at the Nairobi Securities Exchange. The study was guided by the following specific objectives: to determine the effect of Director Skills on dividend decisions of companies listed at the Nairobi Securities Exchange, to establish relationship between board independence and dividend decisions companies, listed at the Nairobi Securities Exchange, to examine the effect of board diversity on dividend decisions of companies listed at the Nairobi Securities Exchange and to investigate the effect of board tenure on dividend decisions companies listed at the Nairobi Securities Exchange. The study was anchored on the following theories: agency theory, stakeholder’s theory and stewardship theory. The study adopted a descriptive research design. The population of this study consisted of 700 top management staff drawn from all the 64 firms listed at Nairobi Securities Exchange. Stratified random sampling technique was used to select the sample. The sample size consisted of 254 top management staff of all the 64 listed firms at Nairobi Securities Exchange. The study used both secondary and primary data. Primary data was collected using questionnaires which were structured. Collected research data was analyzed using Statistical Package for Social Scientists software. The analysis was done using both descriptive and inferential statistics. This study provides an objective assessment of the available data and studies regarding the effect of board composition on dividend decisions of companies listed at the Nairobi Securities Exchange. The findings are appropriate and relevant for seeking a solution to combating poor board compositions among listed companies which improve their dividend decisions. This study has intellectual importance especially to other companies not listed on Nairobi Securities Exchange but facing similar problems with their board composition. It provides essential information for scholars seeking a wide variety of options towards approaching the issue of board composition and dividend decisions of companies. At 5% level of significance, directors’ skills, board independence and board tenure were found to be statistically significant while board diversity was not significant. The study used the F- statistic to test the overall significance of the regression model and the model was found statistically significant and suitable for this study. The model had an R2 of 0.7769 implying that variations in the four independent variables accounted for 77.7% of variations in the dependent variable which was further proof that the model was statistically significant and suitable for the study since it explained nearly all the variability of the dependent variable. It is against this backdrop that this research study arrived at conclusions including that profitability had the greatest influence on dividend payout for firms listed at the NSE and recommended among others, that companies listed at the NSE observe and manage well their policies dealing with the four independent variables. Finally, the study made various recommendations among them, further similar research using multiple economic factors. This will enable a thorough research as it gives a wholesome approach to establishing determinants of dividend payout for firms listed at the NSE.

scholarly journals Financial Innovations and Levels of Risks in Commercial Banks in Kenya

2019 ◽  
Vol 3 (III) ◽  
pp. 111-121
Author(s):  
Hassan Maalim Abdullahi ◽  
Ambrose O Jagongo
Keyword(s):  
Commercial Banks ◽  
Reliability And Validity ◽  
Secondary Data ◽  
Target Population ◽  
Internet Banking ◽  
Primary Data ◽  
Financial Risks ◽  
Inferential Statistics ◽  
Financial Innovations ◽  
The Relationship

The commercial banks need to identify the sources of the several financial risks which emanates from financial innovations, as they may affect the banks’ stability. This study sought to determine the influence of financial innovations on level of risks in commercial banks in Kenya. The specific objectives were to determine the relationship between internet banking and financial risks in commercial banks in Kenya; to explore the relationship between mobile banking and financial risks in commercial banks in Kenya; to establish the relationship between agency banking and financial risks in commercial banks in Kenya; and to determine the relationship between electronic cards and financial risks in commercial banks in Kenya. The study adopted a descriptive research design. The target population was all the 42 commercial banks registered with CBK as at December 31st 2016. The unit of observation will be the risk management managers. This was a census study. The study collected both primary data and secondary data. Primary datawas collected from the respondents through a uestionnaire while secondary data was collected from the financial statements. Prior to the actual data collection, the questionnaire was tested for reliability and validity. The collected data was analyzed through descriptive statistics and inferential statistics through aid of SPSS software Version 21. The inferential statistics entailed use of a multivariate regression analysis to establish the relationship between the variables and test hypothesis. The analyzed data was presented using of tables, charts and graphs. 

Board Characteristics and Financial Performance of Government-Owned Sugar Manufacturing Companies in Kenya

2021 ◽  
Vol 5 (4) ◽  
pp. 41-56
Author(s):  
Yvonne Nyaundha Odhiambo ◽  
Keyword(s):  
Financial Performance ◽  
Board Members ◽  
Board Independence ◽  
Manufacturing Companies ◽  
Board Size ◽  
Board Diversity ◽  
Board Characteristics ◽  
The Board Of Directors ◽  
The Relationship ◽  
Firm Attributes

The board of directors is tasked with the obligation and the responsibility of administering changes and operations that support the mission of the organization to realize its vision. Kenya in the recent past, has witnessed a number of organizations listed in the NSE collapsing with the board of directors taking the blame. Specifically, the study sought to establish the association between; board diversity, board independence, board size and financial performance of government-owned sugar manufacturing companies in Kenya. The study sought to determine whether firm attributes have a moderating impact on the relationship between board characteristics and financial results of Kenyan government-owned sugar manufacturing companies. The study adopted the Agency Theory and Stewardship Theory. The study targeted the Government-Owned Sugar manufacturing companies in Kenya during the years 2000 to 2016 when the companies were operational. The study used secondary data where panel data was used. The findings indicated that board diversity and financial performance of government-owned sugar manufacturing companies. In addition, board independence and financial performance of government-owned sugar manufacturing companies was also significant. Board Size had a positive but insignificant relationship with financial performance of government-owned sugar manufacturing companies in Kenya. Firm attributes had no significant moderating effect on the relationship between board characteristics and financial performance of government-owned sugar manufacturing companies. The study recommended that the board members should consist of at least half gender diversity of the board members as determined by the board based on the requirements stipulated by the trade authority. Further, the study recommended that the board members must be independent directors, and their independence should be continuously maintained and reviewed at least annually. Keywords: Board Diversity, Board Independence, Board Size, Firm Attributes & Financial Performance

scholarly journals A Comparative Study of Merger Effect on Financial Performance of Banking and Financial Institutions in Nepal

2018 ◽  
Vol 2 (1-2) ◽  
pp. 47
Author(s):  
Magina Shrestha ◽  
Ram Kumar Thapa ◽  
Ram Kumar Phuyal
Keyword(s):  
Social Sciences ◽  
Financial Performance ◽  
Financial Market ◽  
Performance Measures ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Comparison Method ◽  
Primary Data ◽  
Loan Quality ◽  
The Right

<p>Merger and Acquisition is relatively new reorganization practice undertaken to strengthen the BFIs in the Nepalese financial market. This study makes an attempt to analyze the financial performance of merged banking and financial institutions relative to their pre-merger performance, and assess the perception of the stakeholders towards merger. Six banks and financial institutions are considered as sample to undertake this study along with 120 respondents for secondary and primary data respectively. The financial ratios comparison method along with t-test of changes in performance measures has been used. This study found that merger impacts performance positively when larger and stable parties such as commercial banks act as bidders as opposed to the merger between smaller BFIs mainly other than commercial banks as bidder. The loan quality significantly deteriorates after merger in most of the cases and profitability measured in terms of ROA and ROE is adversely affected in most of the cases after the merger. Therefore, the merger should not be considered as the definite solutions to overcome the challenges faced in the market; enough evaluation is needed to select the right partners before executing the merger.</p><p>Journal of Business and Social Sciences Research, Vol. 2, No. 1 &amp; 2, pp. 47-68</p>

Board characteristics, audit committee attributes and firm performance: empirical evidence from emerging economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rifat Fariha ◽  
Md. Mukarrom Hossain ◽  
Ratan Ghosh
Keyword(s):  
Significant Relationship ◽  
Commercial Banks ◽  
Audit Committee ◽  
Banking Sector ◽  
Independent Directors ◽  
Board Independence ◽  
Content Type ◽  
Board Characteristics ◽  
Management Quality

PurposeThis study is designed and directed to analyze the effect of board characteristics and audit committee attributes on the firm performance of publicly listed commercial banks of Bangladesh.Design/methodology/approachThirty publicly listed commercial banks of Dhaka Stock Exchange (DSE) have been taken as sample for this study. Data have been collected from annual reports between 2011 and 2017 of the assessed banks. Pooled OLS model has been used for running regression model of this study.FindingsBoard independence has a negative and significant relationship with ROA and Tobin's Q. However, Board Independence has a positive and significant relationship with Stock Return. On the other hand, Board Diversity has a negative and significant relationship with ROA and ROE, which implies inefficiency of diversified board members in the context of Bangladesh. Family duality has a positive and significant relationship with ROA and a negative and significant relationship with Stock return. Board Meeting has a positive and significant relationship with ROA. Audit Committee Size has a negative and significant relationship with Tobins' Q. Independence of audit committee chairman has a negative and significant relationship with Tobin's Q and Stock Returns. Presence of non-executive directors and number of audit meetings have no significant relationship with any of the predicted variables.Research limitations/implicationsAmong all variables of the board characteristics, role of independent directors and participation of female directors have conflicting results in this study. This has raised a question about the fair appointment independent directors and their objective view on the board. Female directors' role is not convincing in the context of Bangladesh as most of the commercial banks are family-owned. Policymakers can tighten and supervise the appointment of independent directors to ensure good governance in the banking sector. Moreover, role of audit committee and independence of audit committee chairman have generated conflicting results in terms of market-based performance measure.Originality/valueBanking sector of Bangladesh experiences huge corruption in the form of excessive NPLs and poor management quality which results in low profit for the firm. This study has explored the problems of management quality and flaws of audit committee which is hampering overall growth of banking industry. Improvement of independent directors' appointment and audit committee formation and reporting will certainly help banking industry of Bangladesh to improve overall performance.

Bantuan Hukum Cuma-Cuma Bagi Tersangka yang Tidak Mampu Pada Tingkat Penyidikan

2020 ◽  
Vol 19 (2) ◽  
Author(s):  
Rio Saputra ◽  
Mokhammad Najih
Keyword(s):  
Secondary Data ◽  
Primary Data ◽  
Legal Aid ◽  
Criminal Cases ◽  
Legal Research ◽  
Factors Affecting ◽  
Legal Structure ◽  
Procedure Code ◽  
Study Techniques ◽  
The Right

<p><em>Suspects have the right to obtain legal assistance, especially for suspects who are classified as economically disadvantaged in accordance with Article 56 of the Criminal Procedure Code (KUHAP). The facts show that there are many irregularities in the implementation of legal aid, therefore it is necessary to know about the implementation of free legal aid for suspects who are incapacitated at the level of investigation and the factors that become obstacles in the implementation of legal aid. This legal research is an empirical legal research and this research is descriptive in nature. The data used are primary data and secondary data. The techniques used to collect data were document study techniques and interview techniques. Inhibiting factors affecting the implementation of free legal aid for suspects who are unable at the level of investigation can be classified and differentiated into 3 factors, namely, legal substance, legal structure, and legal culture).</em></p><p><strong><em>Keywords: </em></strong><em>Legal Aid, Criminal Cases</em></p>

FACTORS AFFECTING ECONOMIC PERFORMANCE THROUGH PARTICIPATION OF ZAKAT RECIPIENT IN DEVELOPING BUSINESS

2019 ◽  
Vol 24 (3) ◽  
pp. 243-250
Author(s):  
Estiningsih ◽  
Sundari
Keyword(s):  
Social Capital ◽  
Economic Performance ◽  
Structural Equation ◽  
High Reliability ◽  
Hypothesis Test ◽  
Reliability And Validity ◽  
Community Empowerment ◽  
Primary Data ◽  
Equation Modeling ◽  
Empowerment Program

Community empowerment is a form of development which directly involves the community. In community empowerment program, the position of the community is as program consumer but as program producer instead. Community empowerment aims to achieve community independence and welfare. Zakat is a subsystem which can support community empowerment program. It’s consistent with the objective of zakat, which is material and spiritual wellbeing. To encourage the success of the program, there should be support from various parties, including companion and social capital supports.The purpose of the present study was determining the direct effects of companion and social capital on participant of zakat recipient and its impact of economic performance of zakat-receiving micro businessman. The present study used primary data by involving 72 zakat-receiving micro businesspeople (mustahik businesspeople) in Wonosari Sub-district, Gunung Kidul Regency, Special Region of Yogyakarta. The research instrument was questionnaire with likert-5 scale which has high reliability and validity based on Cronbah Alpha and Kaiser-Meyer-Olkin values. The empirical model was analyzed using Structural Equation Modeling (SEM).The result of hypothesis test shows that companion and social capital affected the participation of zakat recipient, and the participation of zakat recipient affected the economic performance of zakat-receiving micro businessman.

Financial Innovations and Performance of Commercial Banks in Kenya

2020 ◽  
Vol 2 (2) ◽  
pp. 21-33
Author(s):  
Naomi Wanja Ireri ◽  
Gladys Kimutai
Keyword(s):  
Rural Areas ◽  
Commercial Banks ◽  
Internet Banking ◽  
Ease Of Use ◽  
Primary Data ◽  
The Internet ◽  
Mobile Banking ◽  
Good Opportunity ◽  
Financial Innovations ◽  
Automated Teller Machine

Commercial banks in Kenya have embraced alternative banking channels which represent a shift in delivery of banking and financial services since the alternative banking have become synonymous with commercial banks in Kenya. While banks have succeeded in leveraging available technology and provide alternative avenues to customers for banking services, the challenge it faces today is optimizing the usage of these channels so as to improve on their performance. The general objective of this study was to investigate the effects of financial innovations on the performance of commercial banks in Kenya. The specific objectives of the study were to examine the influence of internet banking, mobile banking, agency banking and ATM banking on the performance of commercial banks in Kenya. The study was guided by agency theory, balanced score card and diffusion of innovation theory. This study employed a descriptive research design. The study targeted44 commercial banks in Kenya as at 2017. The 16 banks which embrace all the four financial innovations from 2013 to 2017were selected using purposive sampling method. The sample size was 80 respondents who comprised of 5 senior management employees in each of the selected banks.This study used questionnaire to collect primary data from the respondents. Content analysis technique was used to analyze qualitative data collected from open ended questions in and reported in narrative form. Descriptive statistics such as mean and standard deviation were used to analyse the quantitative data. Multiple regression analysis was used to show the relationship between independent variables against dependent variable. The study revealed that internet banking, mobile banking, agency banking and ATM banking had a positive and significant effect on the performance of commercial banks. Thisstudy concludes that the banking industry has benefited tremendously from the development of the Internet. The Internet fundamentally changed the way in which banking networks are designed to meet the client demands and expectations. Mobile banking provides a good opportunity to commercial banks in Kenya to reach many mobile phone subscribers in Kenya who had remained unbanked and unreached due to limited access to bank branch networks in the country. The access to the large masses through mobile banking of the population gives banks the opportunity to grow by reaching the unbanked population. Agency banking has led to accessibility of financial service to many customer in remote areas and hence an increase in effectiveness and efficiency in service delivery. Customers are satisfied with the automated teller machine services because of ease of use, transaction cost and service security but not satisfy with automated teller machine dispense of cash. The study recommends that the public and businesses must be encouraged to use Internet banking in their daily activities, including deposits, payments and money transfers. Commercial banks in Kenya should ensure convenience and security of mobile banking through written guidelines on convenience and security of mobile banking. Commercial banks in Kenya should increase the number of agents in estates and in the rural areas. This can be done by reducing the requirements of becoming a bank agent. The banks should employ customized software that records relevant information on automated teller machine cards so that banks can establish whether unauthorized transaction has taken place or not.

Construct Validity

2017 ◽  
Author(s):  
Richard McCleary ◽  
David McDowall ◽  
Bradley J. Bartos
Keyword(s):  
Time Series ◽  
Construct Validity ◽  
Hypothesis Test ◽  
Secondary Data ◽  
Time Frame ◽  
Primary Data ◽  
Optimal Time ◽  
Intervention Model ◽  
Right Hand ◽  
The Right

Chapter 8 focuses on threats to construct validity arising from the left-hand side time series and the right-hand side intervention model. Construct validity is limited to questions of whether an observed effect can be generalized to alternative cause and effect measures. The “talking out” self-injurious behavior time series, shown in Chapter 5, are examples of primary data. Researchers often have no choice but to use secondary data that were collected by third parties for purposes unrelated to any hypothesis test. Even in those less-than-ideal instances, however, an optimal time series can be constructed by limiting the time frame and otherwise paying attention to regime changes. Threats to construct validity that arise from the right-hand side intervention model, such as fuzzy or unclear onset and responses, are controlled by paying close attention to the underlying theory. Even a minimal theory should specify the onset and duration of an impact.

Board diversity and firm risk-taking in the tourism sector: Moderating effects of board independence, CEO duality, and free cash flows

2021 ◽  
pp. 135481662110143
Author(s):  
Ozgur Ozdemir ◽  
Ezgi Erkmen ◽  
Fatemeh Binesh
Keyword(s):  
Risk Taking ◽  
Composite Index ◽  
Cash Flows ◽  
Board Independence ◽  
Firm Risk ◽  
Board Diversity ◽  
Ceo Duality ◽  
Reduction Effect ◽  
Task Oriented ◽  
Free Cash Flows

This study examines the effect of board diversity on risk-taking for tourism firms and analyzes the moderating effect of board independence, CEO duality, and free cash flows in this proposed relationship. Using a composite index of board diversity and a sample of tourism firms from the US hotel, restaurant, and airline industries, we find that greater board diversity leads to lower risk-taking, measured in standard deviation of return on assets. Moreover, we report that the risk-reduction effect of board diversity is more profound when tourism firms have less board independence and less free cash flows for investments. When board diversity is decomposed into relation-oriented and task-oriented diversity attributes, we find that only the task-oriented diversity is influential in reducing firm risk-taking for tourism firms. Akin to main analysis, the board independence and free cash flows are significant moderators of the relationship between task-oriented diversity and firm risk-taking.

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