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INFLUENCE OF THE MANAGERIAL BEHAVIOUR OF AGENCY COST ON THE PERFORMANCE OF LISTED FIRMS ON NSE


Lilian Njuguna

Masters Student, Jomo Kenyatta University of Agriculture and Technology, Kenya

Dr. Makori Moronge

Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya


ABSTRACT

Agency conflicts between managers and shareholders are characterized by whether the implementation of incentive compensation schemes mitigates the manager-shareholder conflict. This study investigates the relationship between some determinants of managerial behavior and agency cost from one hand, and the impact of this relationship on firm performance from the other. Within the framework of shareholders' and management's behaviors, that the role of management represented by being delegated by shareholders to manage available financial resources of the company and negotiate with all concerned parties on their behalf, must be in such a way that achieves positive outputs exceeding the opportunity cost in which those resources could be utilized and shareholders' wealth maximized.  The Kenyan Capital Market Authority issued guidelines on corporate governance practices for publicly listed companies in 2002.   The study used descriptive research design. The target population was listed firms in the Nairobi Stock Exchange (NSE).The study found out that non-conforming information is a source of the problems of agency conflicts that the organization's good performance depends on the importance of knowledge possessed by a decision maker and that Information would never be fully revealed on the part of the managers due to agency problems.


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