Effect of corporate governance principles on perfomance of public technical, vocational and entreprenuership training (tvet) institutions in Nyanza region, Kenya

Abstract

Performance in TVET institutions increased by 7.5%, with a mean score of 5.803 in 2011. However Nyanza region did not keep pace with the increased performance. Prior studies reveal that the influence of structure of the board and performance of TVET Institutions is unknown. Studies on the effect of clarity of roles and responsibilities of the board on performance and the effect of safeguarding of integrity in financial reporting on performance have not been conclusive. Similarly, the influence of timely and balance of neither disclosure of institutional matters nor the relationship between effectiveness of the board of directors and performance of TVET institutions are known. The purpose of this study therefore, was to establish the effect of corporate governance on performance of TVET Institutions in Nyanza Region, Kenya. Specifically the study sought to: determine the influence of structure of the board; ascertain the effect of clarity of roles and responsibilities of the board; establish the effect of safeguarding of integrity in financial reporting; determine the influence of timely and balance of disclosure of institutional matters on performance; and finally to establish the relationship between effectiveness of the board of directors and performance, of public TVET Institutions in Nyanza region, Kenya. The study was guided by the agency, the stewardship and the managerial Hegemony theories. The study used correlation research design. The population of the study included 99 senior academic managers of TVET Institutions in Nyanza region Kenya. The study employed a census survey with response at 96 %. Reliability revealed 0.872 internal consistency. R2 was .728 with a significance of p < 0.001 indicating that corporate governance principles accounted for 72.8% variations on performance. Correlation analysis revealed that as structure of board, clarity of roles, integrity of financial reporting, timely and balanced disclosure and effectiveness of the board changes by 1 unit, performance too changes by a magnitude of 0.370; 0.493; 0.778; 0.776 and 0.789 respectively. The regression analysis revealed that integrity of financial reporting, (β3= 0.288; p=.002), timely and balanced disclosure (β4= 0.324; p=0.006) and effectiveness of the board (β5= 0.501; p=0.000), contribute significantly to performance. The study concludes that integrity of financial reporting, timely and balanced disclosure and effectiveness have a substantial positive effect on performance. Findings of this study may be used for policy formulation by policy makers to guide in appointment of the board of management to improve governance of TVET institutions and other stakeholders.