BOARD ATTRIBUTES, INSTITUTIONAL OWNERSHIP AND FINANCIAL DISTRESS AMONG INSURANCE COMPANIES IN KENYA
BOARD ATTRIBUTES, INSTITUTIONAL OWNERSHIP AND FINANCIAL DISTRESS AMONG INSURANCE COMPANIES IN KENYA
Imbwaka Philip Muleri - MBA Student, Department of Accounting and Finance, School of Business and Economics, Catholic University of Eastern Africa, GABA Campus, Kenya
Dr. Irene Cherono - Lecturer, Department of Accounting and Finance, School of Business and Economics, Catholic University of Eastern Africa, GABA Campus, Kenya
Dr. Dickson Singoei - Adjunct Lecturer, Department of Accounting and Finance, School of Business and Economics, Catholic University of Eastern Africa, GABA Campus, Kenya
ABSTRACT
The financial wellness of the insurance companies is of vital concern to ensure that there is stability and confidence in the sector. The study aimed to establish how board size, gender board diversity, board expertise and frequency of board meetings influences financial distress of the insurance companies in Kenya and how institutional ownership moderates the relationship. Agency Theory, Upper Echelons Theory, Resource Dependency Theory and the Stewardship Theories were adopted. Longitudinal research design was applied. The research targeted 62 insurance companies in Kenya using secondary data within the scope of 2019-2023. Descriptive statistics and panel data regression techniques were applied in the analysis. The result revealed that board expertise (β = 2.6319, p = 0.000) was the highest predictor of financial distress, followed by gender diversity (β = 1.2214, p=0.002), board size (β = 0.1048, p = 0.001) and frequency of board meetings (β = 0.0812, p = 0.006). Institutional ownership was found to have a significant positive moderating influence on the relationship. The study recommends that the Insurance Regulatory Authority should consider enhancing the corporate governance regulations. The government and other prudential regulators should formulate policies which aim at recruiting and retaining institutional investors in the Kenyan insurance industry.
