Effect of Ownership Structure on Corporate Risk among Firms Listed at the Nairobi Securities Exchange, Kenya

  • Job Ooko
  • Cyrus Iraya Mwangi
  • Joshua Wanjare
  • Nixon Omoro


Ownership structure of companies as well as corporate risk management are critical features in corporate governance. The relationship between ownership structure and corporate risk is partially studied and existing scholarly findings are contentious hence the need for this study. The aim of this study was to determine the effect of ownership structure on corporate risk among firms listed at the Nairobi Securities Exchange (NSE), Kenya .The study was informed by Agency Theory as the anchoring theory. Other theories used   in the study are Mean Variance-Portfolio Theory, the Stewardship Theory and Resource Dependence Theory (RDT).This study was guided by the positivist research approach. Causal survey research design was adopted because the study intended to establish the cause-effect relationship between the variables of the study. The study population was sixty (60) firms at NSE as at 31st December 2021. Secondary data was collected across firms and overtime hence panel design. For the consistency of data, this study was limited to companies that were listed for 11 year period (2011 to 2021) and excludes those that were listed after the year 2011 or delisted or suspended before the year 2021. Panel data obtained covered a span of 11 years; 2011 to 2021 resulting to resulting to 647 observations .The data was analyzed using STATA software. During data analysis, descriptive and inferential statistics were computed. Descriptive statistics comprise the means, minimums, maximums, range and standard deviations .Inferential analysis included panel model estimation. In this study, linear regression was used. The results indicate that foreign ownership, corporate ownership, and diffuse ownership are negatively related to corporate risk. However managerial ownership and government ownership are positively related to corporate risk. The study recommends spreading ownership among a large number of shareholders to reduce the risk of one shareholder having too much control and potentially making decisions that are not in the best interest of the company.


Keywords: Ownership Structure, Agency Cost, Board Independence, Corporate risk, Nairobi Securities Exchange