Examining the Moderating Effect of Economic Growth on the Relationship between Corporate Governance and Enterprise Value across County Revolving Loan Funds in Kenya

Abstract

The literature identifying economic growth as a fundamental determinant of enterprise value of public entities is remote. While traditional research evaluates public owned enterprises through a rigid book-value perspective, this study analyzes the dynamics from a market point of view. The study utilises Gross County Product (GCP) per capita as an explicit metric for sub-national economic growth and examines it as a condition that moderates the relationship between corporate governance and enterprise value across the county revolving loan funds. This quantitative study utilised secondary cross-sectional data spanning the 2019–2024 fiscal periods. The data was time-averaged and covered 31 selected county revolving loan funds in Kenya. Empirical findings revealed that economic growth exerts a statistically significant and positive conditional moderating influence on how corporate governance translates into realised enterprise value. The results imply that robust oversight by county fund boards is most effective in creating and preserving the funds’ enterprise value when embedded within the counties’ expanding economic environments.