CORPORATE GOVERNANCE, ETHICS, SIZE, RETAINED EARNINGS AND DEBTS: THEIR RELATIONSHIP WITH SHAREHOLDER VALUE OF FIRMS IN NAIROBI SECURITIES EXCHANGE

Authors

  • Suleiman Guyo Roba 1Department of Accounting and Finance, School of Business and Economics, Kenya Methodist University P.O Box 267-60200,Meru, Kenya
  • Wilson Muema School of Business and Economics, Kenya Methodist University PO Box 267-60200, Meru, Kenya
  • Dr Ken Mugambi School of Business and Economics, Kenya Methodist University PO Box 267-60200, Meru, Kenya

DOI:

https://doi.org/10.53555/eijbms.v1i2.35

Keywords:

Governance, ethics, retained earnings, Corporate Size, EPS, NSE

Abstract

Traditionally, Corporations exist primarily to maximize shareholders wealth (Berle & Means,1932; Kapoor,2006; Stout, 2012; Friedman, 1962).The struggle for Corporations to maximize profits have taken centre stage in recent years. This has led to increased use by Corporations of various practices to meet the expectations of various stakeholders / shareholders. This study investigates the relationship between corporate ethics, governance, retained earnings, debts and sizes and shareholder value (EPS) of firms listed on NSE. The results of the study should assist Corporate CEOs and Executives make informed use of the Corporate Practices in furthering corporate objectives. A Survey of staffs of 33 Kenyan Firms listed on NSE revealed that there is significant correlation between these practices and the EPS of the Companies. In addition the study revealed that higher ratings on governance and ethical practices promote efficiency of operations among firms hence increased EPS. Increased adoption of retained earnings and debts to finance investments portrayed increased effects on EPS of the firms. The findings further revealed that corporate size have no significant influence on the EPS of the firms. Adoption of these practices can be an appropriate strategy towards maximization of corporate returns; hence shareholder value of firms. Corporate Managers, CEOs and Executives should, however, carefully evaluate corporate strategies/practices they employ against other forces including market characteristics and nature of company products/services.

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Published

2015-06-27

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Vol. 1 No. 2 (2015): EPH - International Journal of Business & Management Science (ISSN: 2208-2190)

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