Abstract:
The main objective of the study was to assess the effect of Corporate Governance practices
on performance of State Corporations in the tourism industry in Kenya. It focused on three
key areas of the organization governance viz., Board diversity; CEO attributes and audit
committee activities as independent variables whereas performance was the dependent
variable. Six State Corporations with headquarters in Nairobi formed the target population.
The subjects of study were 57 management staff of the six selected SCs, which were chosen
based on Census survey since the number was small and manageable. This group was
deemed to have needed information that was sought by the researcher since it is involved in
planning and executing of organization policies. The management staff also formed the unit
of analysis. The study adopted descriptive design and primary data was collected using the
questionnaire that was made up of structured, and closed ended questions based on the five
point Likert scale where 1 was the lowest (strongly disagree) and 5 being the highest as
strongly agree. Before use, the questionnaire was validated through a pilot test on five
employees in one of the organizations (KUC) who were not part of the study. The
questionnaire was also subjected to Cronbach’s test for reliability. The collection of data
involved drop and pick method by the researcher and they were collected after three weeks.
After collection, data was cleaned, coded and analyzed with the help of Excel and Stata
version 13 software. The analysis was based on descriptive and multiple regression
techniques. After the analysis, data was presented in form of charts, tables, percentages and
frequencies. The study found out that board diversity, CEO attributes and audit committee
activities positively and significantly affected performance in the state corporations in the
tourism industry in Kenya,( R- Squared= 53.1%, p<0.05). That signified that 53.1 % of
variance in performance was explained by corporate governance practices while 46.9% was
attributed to other factors. Further, the study established that individually, board diversity
had the highest effect on performance, correlation coefficient (49.4% against audit
committee, which posted a coefficient of 32.5%. Therefore, the study rejected the null
hypothesis for both board diversity, audit committee, and recommended that the government
expedite on diversity in public institutions and empower audit committees for better
performance.
