Efficiency of Universities in Kenya: Does Corporate Governance Matter?

The main role of universities is to be repositories and generators of knowledge, creativity and innovation. As such, universities need to be run efficiently to attain this goal. Despite the critical role of universities in national development, many universities in Kenya continue to experience inefficiencies manifested through governance conflicts, frequent industrial unrest, delayed decision-making, and declining academic quality. However, empirical evidence linking specific corporate governance practices to the efficiency of universities in Kenya remains limited and inconclusive. This study investigates the influence of corporate governance on efficiency of universities in Kenya. This study was based on positivist philosophy and adopts ex post facto research design. The study targeted 48 universities operating in Kenya comprising of 30 public universities and 18 private universities. Secondary data was collected from financial budgets, income and expenditure statements of the universities over the period 2016 to 2021. Data analysis entailed data envelopment analysis and censored regression analysis. Council structure has a significant negative effect on efficiency. In contrast, the frequency of board meetings shows a significant positive effect. Student enrolments, asset base, age of the university, and ownership of the university are also significant determinants of efficiency, with ownership exhibiting a strong negative effect. However, the total number of ethnic groups represented, council remuneration, country economic growth, qualifying high school grade, and student quality do not have a statistically significant effect on university efficiency. The study recommends the need for universities in Kenya to strengthen internal governance mechanisms across all universities.