The moderating effect of firm size between corporate governance practices and decision quality in selected commercial banks in Uganda

Abstract

The study aimed to explore the relationship between Corporate Governance Practices and decision quality in selected Commercial Banks in Uganda. The specific Objectives were to examine the relationship between Transparency and decision quality; To examine the effect of accountability on decision quality; To examine the effect of Board of Directors Independence on decision quality and; To examine the moderating role of firm size on the relationship between Corporate Governance Practices and decision quality. The study used a cross-sectional research design and collected data using self-administered questionnaires from 250 respondents who were comprised of board members, Managers and Bank Officers. From the study findings, the correlation analysis reveals significant relationships among Transparency, Accountability, Board of Directors Independence, Firm Size, and Decision Quality within commercial banks. Notably, there is a positive correlation between Transparency and Decision quality (r = 0.350, p < 0.001), Board Independence and Decision quality (r = 0.345, p = 0.001) and Accountability and Decision Quality (r = 0.575, p = 0.001). While results from simple linear regression show that Board Independence, Transparency and accountability influence Decision Quality, Multiple regression results revealed that only accountability had a significant effect on Decision Quality (B=0.277, P<0.01). The results also revealed that firm size positively moderates the relationship between accountability and Decision Quality (B=0.182, P<0.01). In the regression analysis, Accountability emerges as the predominant driver of Decision Quality, boasting the highest standardized coefficient (Beta = 0.489). Finally, it was recommended that organizations prioritize Accountability mechanisms and strengthen board governance structures to cultivate an environment conducive to sound decision-making practices. By doing so, organizations can enhance transparency, accountability, and decision quality, ultimately driving improved performance and stakeholder satisfaction.