Journal of Finance and Economics
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Journal of Finance and Economics. 2021, 9(2), 77-82
DOI: 10.12691/jfe-9-2-5
Open AccessArticle

Board Structure and Stock Liquidity: An Empirical Study on Nairobi Securities Exchange

David Magaki Bichanga1, , Florence Memba1 and Agnes Njeru1

1School of Business and entrepreneurship, Department of Economics, Accounting and Finance, Jomo Kenyatta University of Agriculture and Technology, P.O. BOX 62, 000, 00200, Nairobi, Kenya

Pub. Date: May 25, 2021

Cite this paper:
David Magaki Bichanga, Florence Memba and Agnes Njeru. Board Structure and Stock Liquidity: An Empirical Study on Nairobi Securities Exchange. Journal of Finance and Economics. 2021; 9(2):77-82. doi: 10.12691/jfe-9-2-5


The aim of this paper was to assess the influence of board structure on the stock liquidity of firms listed at the Nairobi securities exchange. Stock market plays a crucial role in the country’s economy in that it serves as a financial market avenue to enhance openness, create trust and ensure increased firm competitiveness. The success of stock market however highly depends on its ability to trade large size quickly at low cost. This is the ease of buying and selling large quantities of shares in a stock market while not bringing any effect on the prices. The board structure has been found to play a key role as an aspect of corporate governance on firms’ financial performance but its role still remains unclear on stock liquidity of listed firms at the NSE. The study was anchored on the agency theory. It is on this merit that this paper sought to investigate the influence of board structure on stock liquidity of firms listed at the NSE. A census was carried out where all the target population comprised of the 68 firms listed at the Nairobi Securities Exchange. The study used secondary data obtained from the Nairobi securities exchange and the respective firms’ publications annual financial statements using a data collection sheet. Data analysis was done by the use of Eviews 7. The findings indicated that board structure had negative and significant influence on stock liquidity when measured by turnover but no significant influence when measured by quoted spread, illiquidity and liquidity ratio.

board structure stock liquidity Nairobi Securities Exchange

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