Board Independence and Revenue Collection by Kenya Revenue Authority

Abstract

Corporate structure is considered an important requirement for operations for any institution as it lays out the complexity, formalization, and centralization. The Kenya Revenue Authority is the government revenue collecting institution which remits the collected revenues to the treasury for the government to be able to spend in various expenditures. The trend of revenue collection by Kenya Revenue Authority over the past years has been increasing due to the growing economy and also due to increased efficiency in revenue collection. As a result, the study identified objectives in order to analyse the effect of organization structure in revenue collection by Kenya Revenue Authority. The objective of the study was to analyse the effect of board independence on revenue collection at KRA. The study used agency theory, to provide the foundation for the study. Empirical literature was provided where previous relevant studies were highlighted, providing the methodology and outcome. The study targeted Kenya Revenue Authority. Secondary data was also used to gather information necessary in the analysis of the data and improve the quality of the outcome was collected from KRA websites, publications and journals. The collected data was analysed using descriptive and regression analysis techniques so as to answer the research objective. These tests were done using the SPSS v.21. The study found that positive change in board independence resulted positive change in revenue collection. The study concluded that the relationship between board independence and revenue collection was positive and significant. Based on the coefficient of determination and coefficient of correlation values, the study concludes that board independence was strongly positively correlated to revenue collection. The study also indicated that revenue collection was determined strongly by board independence. The study recommended that the number of independent directors increased since their effect on revenue collection is positive and significant. The study recommended the proportionate ratio of independent board of directors should be increased to a minimum of 5 independent directors.