MJAMR

The Impact of Corporate Governance on Financial Performance in Organisations: A Case of DFCU Bank Uganda

Gimbo Florence, Zikusooka Enock


Abstract

This study examined the impact of corporate governance mechanisms on financial performance in organisations, using DFCU Bank Uganda as the case. Corporate governance has assumed central importance in the banking sector following successive episodes of institutional failure both globally and within Uganda, where the closure and resolution of several commercial banks exposed weaknesses in board oversight, risk management, and disclosure that regulatory capital requirements alone could not remedy. DFCU Bank occupies a distinctive position in this landscape, having grown from a development finance institution into a full-service commercial bank and having undertaken the acquisition of a resolved institution, a transaction that placed its governance arrangements under exceptional public and regulatory scrutiny. The study adopted a positivist philosophy and a cross-sectional survey design, gathering data from 148 respondents selected through stratified random sampling from a target population of 235 comprising board- adjacent staff, senior and middle management, risk and compliance officers, internal audit personnel, and branch managers. A structured questionnaire measured four governance dimensions, namely board composition and independence, risk management and internal control, disclosure and transparency, and shareholder and stakeholder rights, against financial performance assessed through profitability, asset quality, efficiency, and liquidity. Data were analysed using descriptive statistics, Pearson correlation, and multiple regression in SPSS version 26. Results indicated that disclosure and transparency recorded the highest mean while shareholder and stakeholder rights recorded the lowest. All governance dimensions correlated significantly and positively with financial performance, with risk management and internal control strongest (r = 0.724, p < 0.01), followed by board composition and independence (r = 0.667, p < 0.01), disclosure and transparency (r = 0.582, p < 0.01), and shareholder and stakeholder rights (r = 0.503, p < 0.01). The regression model was significant (F = 52.16, p < 0.001), explaining 61.4 per cent of the variance in financial performance, with risk management and internal control (β = 0.389) and board composition

Keywords

Corporate governance; financial performance; board independence; risk management; internal
Metropolitan Journal of Academic Multidisciplinary Research

Cite This Article

Gimbo Florence & Zikusooka Enock (2026). The Impact of Corporate Governance on Financial Performance in Organisations: A Case of DFCU Bank Uganda. Metropolitan Journal of Academic Multidisciplinary Research, 5(7). https://journals.miu.ac.ug/pages/article.php?article_id=717

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