Evaluation of State Corporations’ Implementation of Corporate Governance Guidelines in Kenya

Purpose: The study evaluates the implementation of corporate governance guidelines by State Corporations in Kenya. Methodology: A cross-sectional descriptive design was adopted owing to the need to describe characteristics of situations and association with others. The study targeted a sample of 93 corporations, with 68 filling-in and returning the questionnaires utilizing primary data, while a structured questionnaire with closed -ended questions was used to gather the primary data. The variables for analysis included the board of directors; transparency and disclosure; stakeholder rights, obligations and relationship; accountability, risk management and internal controls; ethical leadership and corporate citizenship; sustainability and performance management; and compliance with laws and regulations. Analysis of Variance (ANOVA) was deployed to determine whether implementation of corporate governance guidelines differ across the different categories of State Corporations. Findings: The study determined that State Corporations were compliant with the laws and regulations and recognize transparency and disclosure as important aspects of corporate leadership because they enhance the confidence levels of investors, stakeholders and the wider society. The results also revealed that the state corporations were facing challenges when it comes to stakeholder rights, obligations and relationships. Thus, while the implementation of corporate governance guidelines has not been fully realized, regulatory agencies, public fund management and revenue collection corporations are the most compliant to corporate governance guidelines. The most evident good practices were compliance with laws and regulations, alongside transparency and disclosure, implying the organizations have internal policies and procedures that detect and inhibit violations of applicable law, regulations, and ethical standards. However, major areas of weakness included limited stakeholder rights, obligations and relationship together with the board of directors and ensuring of accountability, risk management and internal controls. Unique Contributions to Theory, Practice and Policy: This study reinforces the stakeholder theory by applying the Mwongozo[1] and OECD governance principles, to test its robustness with respect to policy and practice by advancing the argument that managers must serve the interests of their variant stakeholders. Key confirmatory findings included compliance with laws and regulations, transparency, and disclosure as some of the good corporate governance practices in Kenyan State-Owned Enterprises. In terms of practice, accountability, risk management and internal control were highlighted as areas that needed improvement. Therefore, the implication of this study is that full implementation of the corporate governance guidelines has not been realized by most State Corporations in Kenya. Hence, how can the implementation of corporate governance guidelines be fully realized by State Corporations in Kenya? Finally, this study strengthens the policy and regulatory framework to facilitate implementation of corporate governance guidelines, enriching policies and operational procedures, and informing theory on corporate governance. [1] Code of Governance for State Corporations and a policy document by the Government of Kenya that seeks to incorporate the principles of corporate governance in the management and governance of State Corporations in Kenya.