Analysis of the Relationship between Management Remuneration and Financial Performance of Selected Public Listed Companies in the Nairobi Securities Exchange
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Date
2021-08
Journal Title
Journal ISSN
Volume Title
Publisher
International Journal of Research and Innovation in Social Science (IJRISS)
Abstract
Abstract: This study aimed at evaluating the relationship between
management remuneration and financial performance of
selected listed companies in Nairobi Securities exchange and
adopted quantitative research method while utilising secondary
data from the companies’ websites and the 2016 – 2018 annual
financial reports and stratified and criterion sampling. The study
considered salary, benefits, bonus and allowances on
remuneration and ROA and ROE for financial performance.
Based on analysis using both descriptive and inferential analysis
(Spearman correlation analysis) in the Stata statistical software,
the study has established that, the financial performance (ROA
and ROE) differed from company to company in the three years
evaluated, with, average annual ROA and ROE both decreasing
from 3.5 and 0.113 to 3.1 and 0.068 respectively. Management
remuneration strategies also differed from company to company
with salary (all companies) and benefits (83.3%) being the most
utilised. Bonus was the only management remuneration strategy
that significantly correlated with ROE (r value= 0.4737) and
ROA (r value= 0.3941). It is thus recommended that organisation
to leverage management remuneration strategies such as salary,
benefits and bonus to improve overall financial performance.