Effect of Risk Avoidance on the Financial Performance of Public Corporations in the Water Sector in Kenya

Abstract

Purpose: To determine the effect of risk avoidance on financial performance of public corporations in the water sector in Kenya

Design/Methodology/Approach: The study utilized descriptive survey research design. The target population was 181 staff in different managerial levels currently employed in the nine (9) public corporations in the water sector in Kenya. The sample was selected through stratified proportionate random sampling technique. The study employed simple random sampling in selecting 72 respondents from each stratum by sampling out 40 percent of the groups. Questionnaires were used to collect primary data. Both inferential and descriptive statistics were used to analyze data.

Findings: Risk avoidance influenced finance performance of public corporation in water sector to a great extent. The outcomes showed that risk avoidance was a statistically significant predictor of the performance (R=0.646) and contributed to the variation in performance 41.8 percent (R2=.418, P=0.000).

Implications/Originality/Value: On the risk avoidance, organization should have well developed strategies with detailed planning and preventive measures at level of the organization. This would ensure risks are avoided at early stage of projects thereby avoiding their occurrence. Similarly, fund and organization support should exist to ensure alternative projects are in the offing.