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Open Research Online The Open University’s repository of research publications and other research outputs Investigating Factors Which Influence the Practice of Corporate Governance within the Kenyan Corporate Sector Thesis How to cite: Kimani, Danson Kiarie (2017). Investigating Factors Which Influence the Practice of Corporate Governance within the Kenyan Corporate Sector. PhD thesis The Open University. For guidance on citations see FAQs. c 2016 The Author https://creativecommons.org/licenses/by-nc-nd/4.0/ Version: Version of Record Link(s) to article on publisher’s website: http://dx.doi.org/doi:10.21954/ou.ro.0000ca41 Copyright and Moral Rights for the articles on this site are retained by the individual authors and/or other copyright owners. For more information on Open Research Online’s data policy on reuse of materials please consult the policies page. oro.open.ac.uk Investigating Factors Which Influence the Practice of Corporate Governance within the Kenyan Corporate Sector Danson Kimani Bachelor of Commerce (Finance) Master of Banking and Finance (Financial Markets) Master of Research (Management and Business) Thesis Submitted for the Degree of Doctor of Philosophy Department of Accounting and Finance The Open University Business School Milton Keynes United Kingdom November 2016 List of Abbreviations AGM – Annual General Meeting BSEC – Bangladesh Securities Exchange Commission CEO – Chief Executive Officer CG – Corporate Governance CMA – Capital Markets Authority EAPCC – East Africa Portland Cement Company EGX – Egyptian Stock Exchange GDP – Gross Domestic Product GSE – Ghana Stock Exchange ICPAK - Institute of Certified Public Accountants of Kenya IMF – International Monetary Fund IPO – Initial Public Offer K24 TV – K24 Television LDCs – Less Developed Countries MRes – Master of Research Degree NIS – New Institutional Sociology NSE – Nairobi Securities Exchange NSEC – Nigerian Securities Exchange Commission NTV – Nation Television 1 OECD – Organisation for Economic Co-operation and Development PhD – Doctor of Philosophy SA – South Africa 2 List of Tables Table 2.1: Summary of key empirical studies ................................................................................... 53 Table 2.2: Range of theories used in existing literature .................................................................... 67 Table 3.1: Chronology of events leading to the current CG code (CMA 2002 code)..................... 102 Table 3.2: Funding support in the CG development process .......................................................... 116 Table 3.3: Comparison of key provisions of Kenya's CG code (2002) with the UK Combined Code of 2000 ............................................................................................................................................ 134 Table 4.1: Steps followed in thematic analysis ............................................................................... 148 Table 4.2: NSE sector representation .............................................................................................. 151 Table 4.3: Ethical principles followed in conducting research ....................................................... 156 List of Figures Figure 2.1: Theoretical framework illustrating connection between institutional environment and practice of CG ................................................................................................................................... 94 3 Acknowledgements I would like to recognise the generous support accorded to me by various people during my PhD learning journey. To begin with, I would like to thank my PhD supervisors – Dr Devendra Kodwani, Dr Michael Oliver, and Dr Howard Viney – for their patience, invaluable feedback and comments on my PhD thesis, and the insightful conversations we held throughout my PhD thesis writing process. I have learnt a great deal from them, and will forever remain in debt for their guidance and input towards my development as a professional researcher. I am also immensely thankful to various people at the Open University who have made my PhD learning worthwhile. Firstly, I would like to recognise the support accorded by staff and fellow research students in the Department of Accounting and Finance (DAF) of the Open University Business School. Specifically, I am thankful for the useful feedback provided by fellow DAF members during the presentation of my PhD work in the DAF seminar series. Secondly, I am thankful to the Research School for organising the Doctoral Training Workshops which provided me with a valuable opportunity to learn various research skills, which made my PhD writing process an interesting one. Finally, I would like to acknowledge the generous financial support provided by the Open University during my PhD studies, and without which I may not have been able to reach this milestone in my life. Lastly, I am grateful to the various individuals who kind-heartedly participated in my PhD research during my fieldwork overseas – in Kenya. 4 Dedication I dedicate this PhD thesis to my parents – Mr James Kimani (dad) and Mrs Nancy Wanjiku (mom) – for their encouragement and unwavering support in my life’s endeavours. I also wish to recognise the sacrifices they have made in their lives to ensure that their children went on to receive world-class education. To quote their words: “we want you to have the very best in life…better education than we did, and a better life than we have lived.” Thanks mom and dad! 5 Table of contents List of Abbreviations ........................................................................................................................ 1 List of Tables ..................................................................................................................................... 3 List of Figures .................................................................................................................................... 3 Acknowledgements ........................................................................................................................... 4 Dedication .......................................................................................................................................... 5 Table of contents ............................................................................................................................... 6 Abstract .............................................................................................................................................. 9 Chapter 1 – Introduction ................................................................................................................ 11 1.0 Introduction ............................................................................................................................. 11 1.1 Research Motivation ............................................................................................................... 11 1.2 Research Objectives and Questions ........................................................................................ 17 1.2.1 Research Objectives ......................................................................................................... 17 1.2.2 Research Questions .......................................................................................................... 18 1.2.2.1 Central research question .............................................................................................. 18 1.2.2.2 Research sub-questions ................................................................................................. 18 1.3 Outline of the thesis ................................................................................................................ 19 Chapter 2 – Literature review ....................................................................................................... 20 2.0 Introduction and Purpose of the Chapter ................................................................................ 20 2.1 Defining Corporate Governance ............................................................................................. 21 2.1.1 Meaning of corporate governance .................................................................................... 21 2.1.2 The Anglo-American Governance model ........................................................................ 24 2.2 Review of CG Work in Africa and Other Less Developed Countries (LDCs) ....................... 28 2.2.1 Context Building .............................................................................................................. 28 2.2.2 Critique of CG Research in Africa and Other Similar LDC Contexts ............................. 29 2.2.3 Limitations and Gaps in Current Research ...................................................................... 60 2.2.4 Implications for Research Question and Methodology .................................................... 62 2.3 Theoretical Lens – The Role of Theory in Thesis................................................................... 65 2.3.1 Agency Theory ................................................................................................................. 71 2.3.2 Stakeholder Theory .......................................................................................................... 73 2.3.3 Institutional Theory .......................................................................................................... 79 2.3.4 Implications for Research