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Ba&k)o*nd o+ th, st*d$
Corporate Governance has come to mean many things. Traditionally and at a
fundamental level, the concept refers to corporate decision making and control,particularly the structure of the board and its working procedures. Hermes,
(!!"#. $enifer, (!!# defines Corporate Governanceas a set of interlocking rules
by which corporations, shareholders and management govern their behaviour. %neach country, this is a combination of a legal system that sets some common
standards of governance and systems of behaviour determined by firms
themselves.Corporate Governance scandals and accounting failures such as &a'well in the
) and *nron in the + have been dominating business debates during the last
decade. n increasing and ethical problems are recogni-ed as symptoms of failing
Corporate Governance and systems of accountability and control in publiclyuoted firms %gor, (!!"#.
niversities and other Tertiary %nstitutions in ganda are governed by niversity
and /ther Tertiary %nstitutions ct !!1and an amendment ct !!0. The cts
empower niversities to constitute governing boards councils, appointmentsboards, senate and academic boards. The governing boards 2niversity councils
monitor and control performance of niversities and other Tertiary %nstitutions asstipulated by ct !!1and an amendment ct !!0. The creation of a board of
3irectors is to monitor the performance of the firm ()osnik, 1456, 144!
merican 7aw %nstitute, 145#. %t is, therefore predicted that if the 8oardperforms its duties effectively, the value of the firm is predicted to increase and
the wealth of shareholders would be enhanced accordingly.
ccording to )yambogo niversity strategic plan !!92!6 a number of polices
were approved by council that include restructuring of staff, appointments,salaries and benefits. These have caused academic staff unrest at )yambogo
niversity. The academic staff took the issue to courts of 7aw, (3aily &onitor
:ewspaper, $uly !!;# which courts ruled in favour of the academic staff andordered management of )yambogo niversity to reverse the earlier decision on
appointment letters. )yambogo niversity council did not play its role to the
satisfaction of the academic staff instead the courts of law had to resolve thematter. The legal costs paid by the niversity in addition to the time lost, and
unrest caused disruptions in operations of niversity.
There was turbulence caused by the nonepper :ews
paper +eptember 0!, !!9#.
&akerere niversity council approved a new fees structure for the academic year!!;2!!9 which were in the &akerere niversity strategic plan !!;2!9 which
caused public outcry and Government had to intervene and stopped the increment
in fees, (3aily &onitor :ews paper ugust , !!;#. &akerere niversity8usiness +chool Council in !!0 as an affiliated %nstitute of &akerere niversity
approved new fees structure which included computer and medical fees
recommended by &anagement in the strategic plan !!02!" and were to be paid
annually by all students. However, continuing students agitated and refused to pay
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computer and medical fees. This caused unrest in the student community to the
e'tent of students disrupting lectures at &8+ campus (3aily &onitor
>ublications /ctober 15, !!;#. &barara niversity of +cience and Technologyhas a debt of +hs "! million as compensation to former owners of niversity %nn
buildings since 1454 which the niversity Council and Top management have
failed to settle and instead continue to appeal to Government for their rescue(&+T nnual ?inancial reports 144! @ !!;# . The niversity is under threat to
be sued, (=ed >epper :ews paper +eptember 11, !!9#. The niversity Council
and Top management by now could have put up measures to generate funds toclear the debt, therefore the continued indebtedness may cripple the financial
performance of the niversity and may also retard the institutional life cycle. =ed
%n the =ed >epper :ews paper +eptember 11, !!9, Gulu niversity cademic
+taff had a sit down strike protesting non< payment of +alary rrears and nonremittance to :++? (:++? nnual =eports !!;< !!9# and = (= nnual
financial reports !!; @ !!9# monies deducted from their salaries,. >ublic
niversities continue to e'perience low revenue collections that do not match the
e'penditure figures, as evidenced in table 1.1below.Tab-, .%." A&t*a- R,/,n*, and A&t*a- E01,ndit*, +o th, Finan&ia- Y,a2334536
Uni/,sit$ A&t*a- R,/,n*, A&t*a- E01,ndit*, Vaian&,
)yambogo !,0";,09,66! ,0";,90,10
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So*&," A modi+i&ation o+ th, mod,- b$ Ga/in : G,o++,$ ;2334olicy E decision making
Boad Ro-,s &onitor E Control
ccess to =esources
+trategi-ing
dvices E Counsel
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complement each other. The decision making style of the board has been linked to
corporate performance >earce and ahra, (1441#. >rior research has investigated
the immergence of corporate governance in developing economies in the conte'tof corporate governance reforms, =wegasira, (!!!# has e'amined frica.
)rambia and >saros (!!9#, investigated the implementation of Corporate
Governance principles in an emerging economy of Cyprus and the findingsindicated only a minimal impact unless it is supported by other initiatives. ?urther
noted that Cyprus was making serious endeavors to improve the corporate
governance of its listed companies.+olomon et al., (!!!, !!0# argues that for developing countries to be
internationally competitive and attract foreign capital they need to adopt
commonly accepted standards of corporate governance implies standards based
on the nglo
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&atama, (!!;# used three basic tenets of Corporate governance transparency,
disclosure and trust in relation to commercial bank financial performance in
ganda which is a profit making organi-ation.&asibo, (!!;# focused on the board structure and board process in relation to
state owned corporations set for divestiture and those listed on ganda securities
e'change which are profit making.%n line Gavin and Geoffrey (!!"#, the current study focuses on board si-e, policy
E decision making as indicators of Corporate Governance in relation to board
roles, contingency, board effectiveness and financial performance of publicniversities in ganda.
The concept of accountability though not listed in the scope of the study the
accountability concept cannot be overlooked when reviewing corporate
governance literature. ccountability relationships occur in every sector of thesociety including the commercial sector (Dheelers, !!!#. Dhere there is
inadeuate accountability resources will be used inefficiently and ineffectively
thus, inadeuate accountability can result in devastating conseuences for
millions of people and compromising the operations of an organi-ation ()luver,!!1#. ccountability is multifaceted and comple', at the heart of which is the
notion of one party rendering an account of the use of resources to another party.Gray and $enkins (1440# have the opinion that accountability is an obligation to
present an account of and answer for the e'ecution of responsibilities to those
who entrusted those responsibilities, the principal2agent relationship )luver,(!!1#. ccountability forms the basis of the trust in organi-ations, so when
accountability relationships are undermined then our trust in organi-ations is
damaged. Dhile accountability might at first seem to be easily defined the reality
is that it is a comple' multifaceted concept. &uch of the earlier researchesfocused on accountability as measure of Corporate governance, this study is
focused on board si-e, policy and decision making.
Boad si>,
Dhen the board has adopted a clear view of its responsibilities in governing the
company, the directors can then move to discuss and agree the most effective way
of structuring the board. Consideration could be given to the si-e of the boarditself is the board too small or too large to adeuately fulfill its reuirements,
given the si-e and comple'ity of the organi-ationB The balance of the e'ecutive
and non
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and 7orsch, (144#. Dhat is clear is that the roles of the board have evolved over
time. 3efining a clear role set is difficult as different disciplines concentrate on
different areas of interest. >ettigrew, (144# identified si' themes of academicresearch on the role of managerial elites such as chairpersons, presidents, Chief
e'ecutive /fficers (C*/s# and 3irectors. These include the study of interlocking
directorates and the study of institutional and societal power, the study of boardsand 3irectors, the composition and correlation of top management teams, studies
of strategic leadership, decision making and change, C*/ compensation and C*/
selection and succession. There are, however board roles that receive boardsupport Gavin and Geoffrey, (!!"#as e'plained below.
Monitoin) and &onto-
The first role of the board is controlling and monitoring management, a role made
necessary by the separation of ownership from control 8erle and &eans, (140#.They added a separate strategi-ing role of the board. This role is normally
subsumed under advisingI role. The strategi-ing role is included for three
reasons the increasing performance pressures being applied by institutional
stakeholders 8lack, (144#, board perception of the importance of the strategi-ingrole Tricker, (145"# and recent legal precedent that places corporate goal setting
and strategic direction suarely within the boards charter 8a't, (!!#, Glabersonand >owell, (145;#, )esner and $ohnson, (144!#.
Stat,)i>in)
The boards obFective in strategy formulation is to ensure that the strategy of thecompany will lead to the long
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dvising the C*/ is widely acceptable 7orsch and &aclver, (1454# and also
resource dependence perspective, which envisages a role for directors in
providing access to resources, including information >feffer, (146#.
Contin),n&$ ? boad o-,s and boad ,++,&ti/,n,ss
Dhile all boards are reuired to undertake activities within the spectrum of this
roles set, they contend that each organi-ation will need a different emphasisamong these roles. Thus, there is need to e'plicitly incorporate a contingency
perspective Heracleous, (!!1#, 3onaldson and 3avis, (144"#, $ohnson et al ,
(1449#. +ince a particular board composition or behavior that is advantageous forone corporation may prove inappropriate or even detrimental in anotherI
Heracleous, (!!1#. There is need to identify the control variables and gaps in
understanding how the board can impact on firm performance.
The particular contingencies that will impact on board roles @ corporateperformance would include organi-ational si-e 3aily and 3alton, (144#, 3alton
et al,. (1444#, diversity +iciliano, (1449#, management e'perience Coulsonresence and use of skills and knowledge has been identified as another important
dimension of board effectiveness. 8oard members must have the right mi' of
skills and knowledge. ?or instance, they should possess both functional
knowledge in traditional areas of business such as accounting, finance, legal ormarketing as well as industry specific knowledge that will enable members to
truly understand specific company issues and challenges. %n addition, board
members must have enough general knowledge to provide good input on all
topics of discussion, ask uestions of all special interest until they are comfortableenough to cast votes *spstein et al, (!!#. Thus, for boards to work effectively,
:icholson E Geoffrey (!!"# emphasi-e that board members must possessnecessary knowledge and skills, given the uniue nature of their tasks. +imilarly,
for a board to effectively perform the supervisory role, it should be composed in a
manner that enhances the presence of skills and knowledge :amisi, (!!#.
Committ,,s
+ignificant research effort has focused on the impact of committees, )lein ,
(1454#, most notably the audit committee )lein, (!!#, remuneration committee
Conyon and peak, ( 1454# and nominating committee Jafeas, (1444# withfindings that there is a link between the presence of board committees and board
effectiveness. committee is a group of members to whom some specific role has
been delegated by a full board. Committees can be used to gather, review andsummari-e information and report back to the full board for decision or can be
delegated specific decision making powers, Gavin and Geoffrey, (!!"#.
D,-,)ation
The final function that a board needs to consider is its duty with respect to
delegation authority. Given the comple'ity of the business environment, it is
impossible for the board to be the sole decision< making body in the company.
%nstead, each board needs to work on developing an appropriate method and levelof delegation of authority. /bviously this will again vary with the conte't facing
the board but, in all circumstances, the board needs to clearly articulate and
document the delegations it makes Gavin and Geoffrey, (!!"#.
Risk mana),m,nt
=isk management includes the identification of all significant risks faced by the
company and ensuring that appropriate policies are in place to moderate theimpact of these risks )lein, (!!"#. This study will focus on council committees
like appointments board committee, staff welfare committee, students welfare
committee and ?inance tender and general purposes committee and the roles
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effective boards lead to effective organi-ation. ?rom either an internal longiesse (1444#. $ust like ganda the *ducation and health sectors are becoming
increasingly important. ?ew researchers have researched on a direct link between
Corporate Governance and financial performance. This therefore called for aninvestigation into the relationship between Corporate Governance and financial
performance with the inclusion of a contingence variable as a moderating variable
in non profit making organi-ations in ganda, with the focus on public
niversities.
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MET(ODOLOGY
R,s,a&h d,si)n
The =esearch study used cross sectional and analytical research designs. Theseresearch designs were used to collect a snap shot of data and analysis of the
relationships between study variables.
St*d$ 1o1*-ationThe study population si-e of 1 constituted 41 council and 10! senate members
of " public niversities namely &akerere niversity,, &barara niversity of
+cience and Technology, )yambogo niversity and Gulu niversity. The unit ofanalysis was niversities.
Sam1-, si>, and sam1-in) d,si)n
sample si-e of 1" council members and senate members was used as
determined from )reFcie and &organ (146!# table.>roportionatestratified and simple random sampling designs was used to select
the sample of 1" members as shown in Table 1 below.
Tab-, ." Po1*-ation and sam1-, si>,
Instit*tion Po1*-ation si>, Sam1-, si>,
Co*n&i- S,nat, Co*n&i- S,nat,
&akerere niversity " 9; 1; "
)yambogo niversity 14 1" 1
&+T " 14 1; 1
Gulu 1 6 1" 15
TOTAL @. .3 6 4
+ourceA +econdary 3ata
So*&,s o+ data
The two sources of data were primary and secondary data. >rimary data was
obtained from primary source on Corporate Governance, board roles, boardeffectiveness and contingency. +econdary source provided secondary data on
financial reports and number of council and senate members.
Data &o--,&tion m,thods
Kuestionnaires and abstraction methods were used in collecting data. +emistructured uestionnaires were used to collect primary data directly from the field.
bstraction method was used to collect secondary data from financial reports.
M,as*,m,nt o+ st*d$ /aiab-,sThe independent variable which was corporate governance had to be measured in
terms of board structure 2 si-e and decision making. 8oard roles were measured in
terms of monitoring and control, access to resources, strategy and advice and
counsel. 8oard effectiveness was measured in terms of committees, riskmanagement, delegation, skills and knowledge. Contingency was measured in
terms of management e'perience (Coulson @Thomas, (1440#, institutionalturbulence, institutional life cycle ($ohnson, (1446#. ll indicators were subFected
to a four point likert scale of strongly agree, agree, disagree, and strongly
disagree. ?inancial performance as dependent variable was measured in terms of
the revenue collection performance ratio of actual revenue over budgeted revenue.*'penditure performance ratio of actual e'penditure over budgeted e'penditure.
1"
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Jalue for money was measured as a ratio of actual revenue over actual
e'penditure (efficiency#.
Va-idit$ and ,-iabi-it$ t,sts
Content validity inde' (CJ%# was used to measure the relevancy of the uestions
used to measure the study variables of Corporate governance, board roles,
contingency, and board effectiveness. four point scale of relevant, uiterelevant, somewhat relevant and not relevant was used to collect the responses
from two e'perts in the area of study. proportion of relevant and uite relevant
was computed to get the CJ%s of the two e'perts. The CJ%s were !.946" and!.;654. +ince the uestions were relevant to the study variables.
The reliability tests performed using cronbach alpha coefficient to determine the
internal consistency of the likert scales used to measure the study variables
indicated alpha coefficients for all variables above !.9!.
Data 1o&,ssin) and ana-$sis
>rimary and secondary data was coded, edited and analy-ed using the +tatistical
>ackage for +ocial +ciences (+>++# version 1!. 3escriptive statistics and chiublishing, 7ondon.
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and %nstitute of 8usiness dministration.
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