Corporate governance and financial performance of private institutions of higher learning in Uganda: a case of Islamic university in Uganda

Abstract

The study was conducted on Corporate Governance and Financial Performance of Private Institutions of Higher Learning in Uganda, using a case of lslamic University of Uganda (lUlU). (The Universities and Tertiary Institutions Act, 2001, Amendments Act, 2003). Despite the National Council for Higher Education efforts in implementing Corporate Governance structures in private Universities, by appointing the Governing Council; comprising of the Chancellor and his executive, there are still challenges in Corporate Governance leading to widened disparities between shareholders and directors in Institutions of higher learning. The research objectives were to; to assess the relationship between the Council, Executive Board, Audit committee, ownership structure and Financial Performance of lUlU. A case study research design was employed and both quantitative and qualitative approaches were used. Data was collected using questionnaires and interviews from University Council, University Secretary's department, Finance/Procurement department and Academic Registrars department. Total of 36 questionnaires were administered to Employees of lUlU. However by the end of the exercise only 30 questionnaires were collected posing a response rate of 83.3% and non-response of 16.7%; it implied that more than 50% of the sample participated in the exercise. Pearson's Correlation Coefficient for Corporate Governance and Financial Performance was r = 0.689**, with probability value (p = 0. 000) that is less than a = 0. 01 level of significance showing a strong positive relationship between Corporate Governance and Financial Performance at the one percent level of significance. Basing on the findings, a strong positive significant relationship between council and financial performance of lUlU was witnessed r=0.845 and also strong positive significant relationship between Executive Board and financial performance of lUlU was witnessed r=0 .766, a strong positive significant relationship between Audit Committee and financial performance of lUlU was witnessed r=O. 755 and finally a strong positive significant relationship between policies and financial performance of lUlU r=0.701. The recommends that, lUlU should, devote more time and commitment to perform their oversight functions and appointment to the committee should take care of technical competency (qualification and experience) of the members. The audit committee should be more independent and they should be obliged to report fraud and any observed non-compliance with the internal controls and policies. Proper accounting and disclosure with reasonable accuracy at any time the financial position of the University, the excess revenue/profits should be distributed to the shareholders.