Corporate Governance Practices and Financial Performance of Tourist Firms in Narok County, Kenya

Corporate governance has become a decisive determinant of enterprise performance in the tourism industry, particularly in destination economies where firms face pronounced seasonality, market volatility, and complex stakeholder demands. In Narok County, which hosts the globally renowned Maasai Mara National Reserve, tourist firms record persistently inconsistent financial performance despite the sector contributing over 90% of locally generated revenue, a mismatch widely attributed to governance weaknesses, weak risk management, and limited disclosure. Therefore, this study examined the effect of corporate governance practices on the financial performance of tourist firms in Narok County, Kenya. The specific objectives were to assess the effect of board quality and independence, disclosure transparency, ownership by local entities, and corporate governance structures on the financial performance of the tourist firms. The study was underpinned by Agency Theory, Stewardship Theory, Stakeholder Theory, and the COSO Internal Control Framework. A descriptive-correlational research design was adopted, targeting 176 registered tour firms operating within or serving Narok County as the units of analysis, with senior managers, finance officers, and administrators serving as the units of observation. A sample of 122 firms was selected using stratified random sampling, and data were collected through structured questionnaires and semi-structured interview guides, then analyzed using descriptive and inferential statistics presented in tables. The study found that board quality and independence had a significant positive influence on the financial performance of tourist firms (r = 0.352, Beta = 0.221, p < 0.05). Disclosure transparency emerged as the most influential determinant of financial performance (r = 0.544, Beta = 0.386, p < 0.05), indicating that timely, accurate, and comprehensive reporting builds stakeholder trust and reduces information asymmetry. Ownership by local entities was found to positively and significantly influence financial performance (r = 0.511, Beta = 0.281, p < 0.05), while corporate governance structures had a positive and statistically significant but comparatively weaker influence (r = 0.277, Beta = 0.157, p < 0.05). The study recommends that tourist firms should strengthen board quality and independence by ensuring boards are composed of qualified, experienced, and independent members. Firms should prioritize disclosure transparency by adopting comprehensive and timely reporting practices. Tourist firms should actively involve local stakeholders in ownership and management to enhance community engagement, market alignment, and long-term sustainability. Finally, firms should strengthen corporate governance structures by developing and consistently implementing formal governance policies, risk management frameworks, ethical codes, and internal control systems.