Board Characteristics and Operational Efficiency of Water and Sanitation Companies in Mount Kenya Region, Kenya.
Year: 2025
Type: article
Abstract: Board characteristics have become a dominant subject matter of scholarly work both in the developing and the developed economies. It links the connectivity between the directors and stakeholders. The general objective of the study was to determine the relationship between board characteristics and operational efficiency of water and sanitation companies in Mount Kenya Region. The specific objectives of the study were to determine the effect of board size, board diversity, board competence and board frequency of meeting on operational efficiency of water and sanitation companies in Mount Kenya Region. The study reviewed various theories and models which included agency theory, stewardship theory, stakeholder’s theory and transaction cost theory. This study adopted quantitative research design. The population of the study comprised of 21water and sanitation companies in Mount Kenya Region. This study made use of all the 21 water and sanitation companies in Mount Kenya Region, hence a census. The researcher used secondary data which was extracted from the financial statements of the water and sanitation companies. The period of the study ranged from 2019 to 2024.This research used Panel Data Regression model to analyze data. The choice of the model was determined by the fact that this model is used to predict the value of one variable depending on the value of other variables in different periods. It was established that board size has a positive effect of 0.350 on the influence of operational efficiency. The study also established that board diversity has a positive effect of 0.283on the operational efficiency. The study further established that board competence has a positive effect of 0.180 on the operational efficiency. The study finally established that board frequency of meetings has a positive effect of 0.299 on the operational efficiency. Since the results revealed that the board characteristics are influential on operational efficiency, there is need for all the stakeholders to be aware of this. Board characteristics are vital for the successes of an entity. Therefore, there is the need for the owners and key stakeholders to be keen when selecting board members in the organizations. In particular board size, board diversity, board competence and board frequency of meeting were found to have a statistically significant effect on operational efficiency. Therefore, this study recommends that the organizations need to improve the qualification for board members in their firms in orders to solve the problem of operational efficiency. The study further recommends that board size is a key matter to consider, as well as board frequency of meetings as they were found to be the most influential variables in the study.
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4414947249