The Intervening Effects of Idiosyncratic Risk on the Relationship between Corporate Governance and Value of Non-Financial Listed Firms at the Nairobi Securities Exchange

  • Fred Obande Buluma
  • Cyrus Iraya Mwangi
  • Mirie Mwangi
  • Nixon Omoro


This study examined whether corporate governance had a relationship with the value of non-financial listed companies at the Nairobi Securities Exchange when idiosyncratic risk was introduced as an intervening variable. The study tested the hypothesis that, idiosyncratic risk had no intervening effect on the relationship between corporate governance and the value of non-financial companies listed at the NSE. The data set included audited financial statements for non-financial listed companies that had been continually listed at the Nairobi Securities Exchange (NSE) over the ten year period, from 2010 to 2019. The study used a descriptive design and a positivist ideology to analyze the effects. After performing diagnostic tests, hypothesis testing was conducted using inferential statistics, notably correlation and regression analysis. The relationship between corporate governance, idiosyncratic risk, and company value was further investigated using multiple regression analysis. Since the sample data included both cross-sectional and time-series data, the panel data technique was deemed more acceptable. Corporate Governance was measured by a composite of board independence, female director representation; East African institution share ownership, independent directors at board meetings, and audit committee meetings while firm value was measured using Tobin’s Q. The study found that when idiosyncratic risk was included as an intervening factor in the analysis, there was no effect on the value of non-financial listed companies. This finding of no idiosyncratic risk intervening in the relationship between corporate governance and non-financial listed companies' value provides useful information about non-financial listed companies' risk-taking behavior in an emerging market.


Keywords: corporate governance proxies, idiosyncratic risk, Firm value, non-financial firms.