Influence of corporate governance practices on working capital efficiency of manufacturing firms in Nairobi County

Abstract

The main motivation of the study was to determine the influence of corporate governance practices on working capital efficiency of manufacturing firms in Nairobi County. The study used descriptive survey research design. The population of the study comprised of all five hundred and fifty four manufacturing firms registered in trade and Industries Ministry of the Nairobi County. The sample size was one hundred and eleven firms. The study used questionnaires, interview guide and documentary analysis as the data collection instruments. The statistical package for social science (SPSS) was used to analyses the data. Correlation analysis was used to test the relationship between the variables. The Corporate Governance practices were measured by Board Structures, internal Audit and shareholders‟ Interest. The results of the study indicated that 87.2% of the variations in the working capital efficiency are related to Board structures, internal audit and the Shareholders interest. The coefficient of variations was found to be .756. This shows that there is a positive correlation between the Board structures, Internal Audit, Shareholders interest and the working capital efficiency. This indicates that the changes in the predictor variables would be very closely associated with the changes in the level of working capital efficiency. The study found that board structure has the highest influence on working capital efficiency than internal audit and shareholders‟ interest The study concluded that there is a significant impact of corporate governance on working capital efficiency of manufacturing firms in Nairobi County. The study recommends that there is need for harmonization of corporate governance across all manufacturing firms since some of them had different nature of corporate governance practices and therefore leading to the difference in the management of working capital.