Corporate Governance and Firm Value: A Comparative Study of Companies Listed on the Nairobi and Uganda Securities Exchange
Abstract
The purpose of this study was to determine the effect of corporate governance on firm value among firms listed on the Nairobi and Uganda Securities Exchange. Agency and Resource-Based theories guided the study. The positivism research paradigm was adopted. The study used panel research design and the data was obtained through content analysis from audited financial statements spanning from 2012 to 2019 and only 48 firms from NSE and 12 firms from USE met the inclusion and exclusion criteria. Stationarity was checked using panel unit root tests and the data were stationary at levels. Hausman test was used for model selection and the fixed effect model was selected over random effects. The direct effect analysis revealed that in securities exchange, the board size, board independence, and board expertise as proxies of corporate governance affected the firm value. In contrary to this, board diversity in both cases did not significantly affect the firm value. However, in USE board independence negatively affect firm value. The study shows that corporate governance determines the value of the firm. As the practical contribution, there is a need to increase board size and board diversity to enhance firm value in listed firms.
Keywords: Firm Value, Corporate Governance, Board Size, Board Independence, Board Expertise, Board Diversity
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