EFFECT OF EXECUTIVE COMPENSATION ON RISK TAKING AMONG LISTED COMMERCIAL BANKS IN KENYA

Lucy Wanjiru Njogu (), Dr. Mouni Gekara (), Dr. Gichuhi A. Waititu () and Dr. Karim Omido ()

European Journal of Business and Strategic Management, 2017, vol. 2, issue 2, 50 - 81

Abstract: Purpose: The purpose of this study was to determine the effect of executive compensation on risk taking among listed commercial banks in Kenya.Methodology:The study used an Epistemology research philosophy, causal research design was adopted whereby panel data approach was used. The target population for this study were the 11 listed banks on the NSE. Secondary Data for the year 2010 to 2015 was collected from the NSE handbook. Data collected was analyzed using descriptive statistics which included means and standard deviations. Inferential statistics such as Pearson correlation and panel regression was also used. The results were presented in form of tables, figures, charts, graphs and trend lines.Results:Based on the findings, the study concluded that there Share Ownership and risk taking are positively and insignificantly related. Regression analysis indicated that Executive Fixed Salary and risk taking were negatively and significantly related. Executive Allowances and risk taking were negatively and significantly related.Regression analysis results indicated that Executive Annual Bonuses and risk taking were negatively and significantly related. Based on the findings the study recommended that banks should pursue optimum compensation policies, which will ensure minimum cost to the bank.Policy recommendation: This study recommends that on Executive Share Ownership banks should not increase director's shares as this will have no effect on risk taking. It was also recommended that banks might want to raise their executive salary bases on their executive staff as this will automatically lead to decreased risk in banks. The study recommended that banks should entice their staff with huge allowances as this will decrease risk. The study also recommends executive annual bonus should be considered incrementally while determining executive compensation perks as it has a decreasing effect on risk among banks listed on NSE.

Keywords: executive share ownership; executive fixed salary; executive allowances; executive annual bonuses; risk taking (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

Downloads: (external link)
https://iprjb.org/journals/index.php/EJBSM/article/view/256 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bdu:oejbsm:v:2:y:2017:i:2:p:50-81:id:256

Access Statistics for this article

More articles in European Journal of Business and Strategic Management from International Peer Review Journals and Books
Bibliographic data for series maintained by Chief Editor ().