Challenges of Effective Corporate Governance in Kenya – a Case for Company Xyz, a Listed Motor Dealer
TERM PAPER: CHALLENGES OF EFFECTIVE CORPORATE GOVERNANCE IN KENYA – A CASE FOR COMPANY XYZ, A LISTED MOTOR DEALER
EXECUTIVE SUMMARY:
This paper explores the challenges of effective corporate governance in the Kenya and how to address the irregularities experienced in the recent years. It examines the crucial role played by the Capital Markets Authority (CMA), as a regulator of the Nairobi Securities Exchange (NSE) in addition to the role of the NSE in ensuring proper compliance to the Regulator’s laws and guidelines. Moreover, it examines the role of professional institutions such as, The Institute of Certified Public Accountants (ICPAK), in curbing corporate governance irregularities in Kenya. It is based on the case of XYZ Motors, a public listed company, that lost millions of shillings in bad business practices and poor corporate governance structures that allowed top executives and directors to pursue selfish interest to the detriment of minority shareholders. As a result, it offers recommendations on possible cause of action in order to curb corporate governance irregularities that lead to tremendous loss of investor money and confidence, throwing the country’s capital markets into jeopardy.
INTRODUCTION:
Corporate governance has emerged as a major policy concern for many developing countries following the financial crisis in Asia, Russia, and Latin America. The collapse of Enron suggests that even the highly industrialized countries such as the U.S. are not immune to the disastrous effects of bad corporate governance. Studies have shown that low corporate governance standards raise the cost of capital, lower the operating performance of industry, and impede the flow of investment. Following the corporate scandals of Enron, WorldCom, and Tyco, more and more countries have embarked on corporate governance reforms to better protect the interests of investors.
In Africa, significant study has been done on corporate governance, the King’s Committee
EXECUTIVE SUMMARY:
This paper explores the challenges of effective corporate governance in the Kenya and how to address the irregularities experienced in the recent years. It examines the crucial role played by the Capital Markets Authority (CMA), as a regulator of the Nairobi Securities Exchange (NSE) in addition to the role of the NSE in ensuring proper compliance to the Regulator’s laws and guidelines. Moreover, it examines the role of professional institutions such as, The Institute of Certified Public Accountants (ICPAK), in curbing corporate governance irregularities in Kenya. It is based on the case of XYZ Motors, a public listed company, that lost millions of shillings in bad business practices and poor corporate governance structures that allowed top executives and directors to pursue selfish interest to the detriment of minority shareholders. As a result, it offers recommendations on possible cause of action in order to curb corporate governance irregularities that lead to tremendous loss of investor money and confidence, throwing the country’s capital markets into jeopardy.
INTRODUCTION:
Corporate governance has emerged as a major policy concern for many developing countries following the financial crisis in Asia, Russia, and Latin America. The collapse of Enron suggests that even the highly industrialized countries such as the U.S. are not immune to the disastrous effects of bad corporate governance. Studies have shown that low corporate governance standards raise the cost of capital, lower the operating performance of industry, and impede the flow of investment. Following the corporate scandals of Enron, WorldCom, and Tyco, more and more countries have embarked on corporate governance reforms to better protect the interests of investors.
In Africa, significant study has been done on corporate governance, the King’s Committee