Corporate Governance, Financial Characteristics, Macroeconomic Factors and Performance of Commercial and Service Firms Listed at the Nairobi Securities Exchange
Moses Odhiambo Aluoch, Prof. Erasmus S. Kaijage, Dr. Cyrus M. Iraya, Prof. Martin Ogutu

Abstract
The study examined relationships among corporate governance, financial characteristics, macroeconomic factors and performance of Commercial and Service firms listed at the Nairobi Securities Exchange. The specific objectives were to establish the effect of corporate governance on performance of Commercial and Service firms listed at the Nairobi Securities Exchange and to determine the intervening effect of financial characteristics on corporate governance and performance of Commercial & Service firms and to establish the moderating effect of corporate governance and performance of firms. This study was anchored on wealth maximization theory, agency theory and positivism philosophy. The study used census approach and a target population of 10 Commercial & Service firms listed at the Nairobi Securities Exchange between 2002 and 2016 were incorporated. The study used panel data and employed longitudinal descriptive research design to determine relationships amongst study variables. A panel data regression analysis was conducted using random effects model which allowed the companies to have a common mean value of the intercept to determine whether corporate governance influences performance of Commercial & Service firms. The research findings revealed that Liquidity and Interest rate significantly affect Return on Assets while Corporate Governance, Investments, Leverage, Growth Domestic Product Growth rate and Inflation rate had an insignificant effect on Return on Assets of listed commercial service firms. The results further revealed that only firm‘s Investments were significantly related to Tobin’s Q of listed commercial & service firms in Kenya. Corporate Governance, Leverage, Liquidity, Growth Domestic Product Growth rate, Interest rate and Inflation rate were found to have insignificant effects on Tobin’s Q of listed commercial & service firms. The study also concluded that commercial and service listed firms in Kenya continued to record poor performance despite corporate governance practices. The shareholders of commercial and service listed firms may adopt the findings of this study to restructure their corporate governance policies and practices to improve performance of their firms.

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