Abstract
Purpose: The objective of the study was to investigate the influence of ethical investor relations on the financial performance of listed firms in Kenya.Methodology: The study adopted a causal research design to establish the relationship between ethical leadership and financial performance of companies listed in the Nairobi Securities Exchange using correlation and regression analysis. Primary data was collected through a semi-structured questionnaire. Secondary data was collected from both the listed firms in the Nairobi Securities Exchange (NSE), and information from the sector regulator, the Capital Markets Authority (CMA). The target population of this study was 64 companies listed in the Nairobi Securities Exchange (NSE) with consistency being evaluated between the years 2011 to 2015. Data analysis was done using the Statistical Package for Social Scientists (SPSS).Results: The study found out that there exists a strong relationship between ethical investor relations and financial performance. The study established that information disclosure, the practice of corporate ethics and vetting of board members being based on ability to achieve the firms' vision is essential for the listed firms.Unique contribution to theory, practice and policy: The study recommends truthful disclosure of information, especially regarding financial statements of the firms.
Highlights
Ethical investor relations refer to how companies manage themselves and their relationships with shareholders
The study established that information disclosure, the practice of corporate ethics and vetting of board members being based on ability to achieve the firms’ vision is essential for the listed firms
In firms listed on the Nairobi Securities Exchange (NSE), investors are highly attracted to invest in firms’ which practice corporate ethics since this is the only way they can be assured of returns from their investments and leading to positive financial performance of the firms they have invested in (Lorraine, 2004; Bedicks, & Arruda, 2005)
Summary
Ethical investor relations refer to how companies manage themselves and their relationships with shareholders. Ethical investors ensure that corporations are being honest and transparent, and that management isn't looking out for its interests to the detriment of others (Lorraine, 2004; Bedicks, & Arruda, 2005). In firms listed on the NSE, investors are highly attracted to invest in firms’ which practice corporate ethics since this is the only way they can be assured of returns from their investments and leading to positive financial performance of the firms they have invested in (Lorraine, 2004; Bedicks, & Arruda, 2005). Kaplan & Norton (1992) assert that the Balance Score Card (BSC) can generally be used for performance measurement. The current study focused on the financial perspective, since financial performance measures define the longrun objectives of the business unit (Kaplan & Norton, 1992)
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