Board composition and financial performance among private limited companies in Uganda

Abstract

American Journal of Leadership and Governance ISSN 2519-0857 (online) Vol.5, Issue 1 No.2, pp 10 - 22, 2020 www.ajpojournals.org 10 BOARD COMPOSITION AND FINANCIAL PERFORMANCE AMONG PRIVATE LIMITED COMPANIES IN UGANDA Rwakihembo John Mountains of the Moon University, School of Business and Management Studies and Mbarara University of Science and Technology, Faculty of Business and Management Sciences, Uganda Email: jrwakihembo.jr@gmail.com Prof. Nixon Kamukama Mbarara University of Science and Technology Email: nkamukama@must.ac.ug Dr. Nsambu Kijjambu Fredrick Mbarara University of Science and Technology Email: nsambu.kijjambu@must.ac.ug ABSTRACT Purpose: The study aimed at examining the relationship between board composition and financial performance of private limited companies in Uganda. Methodology: A positivist approach and a cross-sectional research design were employed to collect data from 394 companies in Central and Western Uganda. An open-ended questionnaire was used to collect data from board members and executives from companies. Pearson correlation and standard linear regression were employed for data analysis. Findings: Results indicate a positive relationship between non-executive directors on the Board and the financial performance of private companies. Unique Contribution to practice and policy: Private Limited Companies in Uganda will attain the much-desired insights in the context of how board composition links with their financial performance. The study recommends the management`s careful consideration of long survival prospects as well as the formulation of appropriate policies and survival strategies that oversee long existence to guarantee benefits and optimal performance coupled with profitability that emanate from a well-composed board. Study Limitation: The study was limited to only board composition, leaving out other board characteristics that influence financial performance. Besides, it was only positivistic hence subject to methods bias that could have affected the validity of results.