Corporate Governance and Modified Audit Opinion: Evidence from State Owned Enterprises in Kenya

Oruke, Mongeri; Iraya, Cyrus; Odhiambo, Luther Otieno; Omoro, Nixon Oluoch

doi:10.32602/jafas.2020.030

Cited by 8 publications

(4 citation statements)

References 12 publications

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“…Boards of directors are responsible for the oversight of managerial information. They can potentially improve financial reporting and performance, that can lead to resilience (Oruke et al, 2020;Cordery & Hay, 2021;Vagliasindi et al, 2023). Hay (2019, 2021) noted that the agency problem in the public sector is more complex than in the private sector due to various ties.…”

Section: Introductionmentioning

confidence: 99%

Corporate Governance, Audit Recommendations, And Financial Resilience: The Case Of State-Owned Indonesian Mining And Energy Enterprises

2024

APMAJ

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This study examined how corporate governance and audit recommendations affected the financial resilience of Indonesian state-owned enterprises'. For five years, 2018-2022, 20 SOEs were studied. The period was chosen to reflect before, during, and after the pandemic. SPSS processed data using OLS. The results showed that board effectiveness and audit recommendations positively and significantly influenced financial resilience. Board effectiveness, in this study, measured by board number, affected an organization's decision-making and strategic outcomes. The auditor's recommendations assisted decision-makers in uncovering and preventing errors, irregularities, fraud, and inefficient practices, fixing deficiencies, and monitoring improvement. However, the hypothesis that government ownership influenced financial resilience was not supported. The findings have extended the growing literature on monitoring mechanisms in the Agency Theory to improve financial resilience and the SAIs activities in SOEs in emerging countries. This study contributes to practical implications such as understanding performance audits and audit recommendations done by the Indonesia Supreme Audit Institution and giving the recommendations to regulators to develop world-class and effective SOEs.

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Section: Introductionmentioning

confidence: 99%

Corporate Governance, Audit Recommendations, And Financial Resilience: The Case Of State-Owned Indonesian Mining And Energy Enterprises

2024

APMAJ

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“…Effective internal controls play a pivotal role in the performance of government-owned entities (GOEs) by sealing gaps in management systems that may lead to corporate scandals, wastages of resources and corruption (Oruke, Iraya, Omoro & Otieno, 2021). These controls include operational, financial and other procedures implemented by organizations to mitigate principal-agency conflicts and ensure positive returns for the business in addition to efficient operations (Tunji, 2013).…”

Section: Introductionmentioning

confidence: 99%

The Intervening Influence of Internal Controls on the Relationship Between Board Practices and Performance of Government Owned Entities in Kenya

Oyugi,

Iraya,

Onsomu

et al. 2024

JABE

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There is a growing public debate on the role of boards in government-owned entities due to poor performance, corporate scandals, and increased corruption. Good board practices and internal controls, including enterprise risk management, are crucial for enhancing performance. Research findings on their impact have been contradictory. However, improving transparency, accountability, and adherence to governance frameworks can positively influence performance. Addressing governance issues is crucial to mitigate resource mismanagement and corruption, leading to better overall performance. The objective was to determine relationships among board practices, internal controls, and government-owned entities’ performance. Data was collected from 153 properly completed questionnaires out of the 157 returned, representing 65.38% of the entire population of 234 government-owned entities. The findings established that internal controls positively and significantly intervened in the relationship between board practices and performance. Implementing good board practices and internal controls promotes accountability and transparency, leading to enhanced organizational performance. Government-owned entities should prioritize implementing effective board practices and internal controls to enhance their overall performance.

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“…The performance of government-owned entities (GOEs) has become a matter of public concern, particularly in light of corporate scandals, resource misuse, and corruption, emphasizing the critical role of the board of directors (Oruke, Iraya, Omoro & Otieno, 2021). While some studies suggest that good board practices can significantly enhance oversight and performance in state-owned enterprises (Mongeri, 2021;Heo, 2018), others have highlighted the potential complexities, indicating that the relationship between board practices and performance may not always be straightforward (Andres, Schwartz & Guash, 2013).…”

Section: Introduction Background To the Studymentioning

confidence: 99%

The Intervening Influence of Enterprise Risk Management on the Relationship between Board Practices and Performance of Government Owned Entities in Kenya

2023

EJBM

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The enterprise risk management is an integrated approach of risk management involving the executive management and board of directors including employees in identification, assessment, reporting and monitoring of strategic, operational, and financial risks across the entire organization. This paper seeks to establish intervening influence of enterprise risk management in the relationship between board practices and performance. The data was sought from all 234 government-owned entities operating in Kenya. 153 GOEs returned properly filled up questionnaires. Secondary data on performance were derived from performance contracting reports. The data was analyzed using AMOS graphics to obtain CB-SEM paths with the aid of IBM SPSS version 26. The conceptual model was built on three latent variables, namely board practices, enterprise risk management and performance. The findings indicated that direct impact of board practices was positive and significant at 60%. The study further established that enterprise risk management significantly positively impacted performance by 26.8%. However, presence by enterprise risk management framework as an intervening variable reduces impact of board practices to performance from 0.600 to 0.268, although it remains positive and significant. Hence despite presence of enterprise risk management, indirect influence of board practices on performance remains significant indicating partial intervention. The enterprise risk management was therefore found to have significant effect as an intervenor on the relationship between board practices and performance. It is therefore important for government owned entities to prioritize implementation of an integrated system of oversight that includes board practices and enterprise risk management framework in order to enhance their overall performance.

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Corporate Governance and Modified Audit Opinion: Evidence from State Owned Enterprises in Kenya

Cited by 8 publications

References 12 publications

Corporate Governance, Audit Recommendations, And Financial Resilience: The Case Of State-Owned Indonesian Mining And Energy Enterprises

Corporate Governance, Audit Recommendations, And Financial Resilience: The Case Of State-Owned Indonesian Mining And Energy Enterprises

The Intervening Influence of Internal Controls on the Relationship Between Board Practices and Performance of Government Owned Entities in Kenya

The Intervening Influence of Enterprise Risk Management on the Relationship between Board Practices and Performance of Government Owned Entities in Kenya

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