Title: Corporate Governance and Financial Performance: A Case Study of Uganda Development Bank
Authors: Zikusooka Enock, Dr Ntirandekura Moses
Volume: 9
Issue: 2
Pages: 31-38
Publication Date: 2025/02/28
Abstract:
This study examined the relationship between corporate governance practices and financial performance at Uganda Development Bank. Specifically, the study analyzed the impact of board independence, management accountability, and transparency on financial performance. A quantitative research approach was employed, and multiple logistic regression analysis was conducted using SPSS and STATA to assess the significance of governance variables on financial outcomes. The findings revealed that transparency had the strongest and most statistically significant positive effect on financial performance (B = 2.1, p = 0.003, Exp (B) = 8.17), indicating that improved financial disclosure and accountability mechanisms contributed to enhanced financial stability. Similarly, management accountability significantly influenced financial performance (B = 1.75, p = 0.004, Exp (B) = 5.75), demonstrating that effective leadership, strategic decision-making, and regulatory compliance positively impacted the bank's profitability and operational efficiency. Although board independence had a positive effect, its impact was not statistically significant at the 5% level (B = 0.8, p = 0.11, Exp(B) = 2.22), suggesting that while an independent board structure promotes sound financial oversight, other factors such as management characteristics and regulatory frameworks play a more critical role. Furthermore, economic conditions, particularly inflation, negatively affected financial performance (B = -0.9, p = 0.045, Exp (B) = 0.41), emphasizing the need for robust financial resilience strategies. Based on these findings, the study recommended enhancing transparency through improved financial disclosures, strengthening board independence by ensuring a higher proportion of independent directors, and increasing management accountability through performance-based evaluation frameworks. Additionally, economic resilience measures such as diversified investment portfolios and flexible financial policies were proposed to mitigate external financial risks. Strengthening corporate governance structures, regulatory compliance mechanisms, and digital financial systems was also recommended to ensure sustainable financial performance.