Abstract:
Worldwide there are on-going debates engaging professionals and academics in understanding the ‘large-scale
corporate failures’ (Wanyama et al., 2014). However, studies show that some companies have been successful as
a result of good corporate governance in Uganda (Mugisha and Berg, 2015). The variations could be explained by
the various efforts, which have been made ‘by government and private organizations to promote good governance
in both the private and public sector’ (Wanyama et al., 2014).1
Corporate governance means the process and structure used to direct and manage the business and affairs of a
financial institution with the objective of ensuring its safety and soundness and enhancing shareholder value and
shall cover the overall environment in which the financial institution operates comprising a system of checks and
balances which promotes a healthy balancing of risk and return2
. Corporate governance is the structure which
directs and regulates business corporations. The structure of corporate governance specifies the distribution of
rights and responsibilities among corporate participants e.g. the board, managers, shareholders and other
stakeholders. According to Cadbury Report, Corporate Governance is the system by which Companies are
directed and controlled (Keasey, et al, 2005).
Furthermore, Cadbury recognized that a system of good corporate governance allows boards of directors to be
free to drive their companies forward”, but exercise that freedom within a framework of effective accountability.
Corporate governance outlines the rules and procedures for making decisions on corporate matters3
. Corporate
governance deals with how to make those in corporate management more accountable, more responsible and
more sensitive to the interest of shareholders, creditors, members of the public and social interests respectively.
Corporate governance refers to the way in which business vehicles` are governed and to what purpose. A system
by which companies are directed and controlled in order to align economic and social goals with those of the
individuals and the community.
