The average score on gender diversity has improved to 21.7 percent from 17.1 percent in 2017.
This is according to Cytonn’s Corporate Governance Report 2018 themed ‘Improved Corporate Governance Key to Investor Protection’ which stated that 2017/18 witnessed a notable improvement on corporate governance and corporate governance reporting which in turn led to more transparency and better disclosure as a result of regulation aimed at establishing proper oversight.
The Cytonn Corporate Governance report disclosed that the average board attendance increased to 85.1 percent from 84.8 percent in 2016 while the average proportion of non-executive directors on the board also increased to 82.3 percent from 82.0 percent in 2016.
The improvements have been as a result of increased regulation from various bodies and organizations responsible for corporate governance oversight and a greater focus on governance, which is essential for the stability of the companies and the general market.
The report stated that compared to last year, the average performance for companies improved by 2.0 percent points to an average score of 69.1 percent from 67.1 percent in 2017, and by 6.2 percent points from 62.9 percent in 2016, mainly driven by better disclosures around governance, an indication that Kenyan listed companies are firming up to better governance practices, which is expected to lead to better performance of various companies.
Companies also registered better performance on ethnic diversity with an average score of 63.2 percent compared to a score of 61.6 percent registered last year. A higher score on ethnic diversity indicated better assortment in board composition, which improves the quality of decision making and enhances creativity and innovation translating to better performance by the companies.
The top 24 companies in the Cytonn Corporate Governance Report delivered an absolute return of approximately 2.1 percent over the last 5-years compared to the bottom 23 companies, which delivered an absolute return of (13.0 percent) over the last 5-years.
Cytonn noted that the improvement across the board was an indication that more companies are on track to full compliance to the CMA’s Code of Corporate Governance Practices, which will be key in achieving this.
Sound corporate governance is essential to well-functioning and vibrant financial markets and Kenyan listed entities are firming up to these practices as shown by overall improvement in market score from 62.9 percent in 2016 to 69.1 percent in 2018.