Board Independence Myth: The Missing Corporate Governance Link on Performance of Commercial Banks in Kenya

Abstract

The need to adopt the right corporate governance mechanisms is driven by the monitoring system. The central role of board of directors in this process has therefore been recognized and currently gaining significant attraction. The purpose of the study was to explore the contributing role board indepedence on performance of commercial banks in Kenya. The study was based on internal control theory. A descriptive design was adopted for the study. The unit of analysis was the commercial banks and unit of observation was the board members and managers of the commercial banks yielding a total of 44 chairpersons and 44 managers of the commercial banks. The study used structured questionnaire to collect primary data. On the other hand, secondary data were obtained from published documents to supplement the primary data. A pilot study was conducted to pre-test the validity and reliability of instruments. Data was analysed using both quantitatively and qualitatively using SPSS version 24 and Excel. Quantitative methods involved a descriptive were used to present quantitative data in form of tables and graphs. The study further adopted a regression analysis to determine the relationship among the variables at 5% level of significance. The study results revealed that board independence positively and significantly influence performance of commercial banks in Kenya.