A model for effective board governance in Uganda's services sector firms

Abstract

Purpose

The present study was carried out with the purpose of establishing a model of effective board governance in Uganda's service sector firms.

Design/methodology/approach

This study is cross‐sectional. The analysis was conducted using Analysis of Moment Structures (AMOS) software on a sample of 128 service firms in Uganda. The perceived effective board governance in Uganda was measured by the perceptions of 128 respondents who are managers or directors in each of those service firms. Three confirmatory factor analysis models were tested and fitted.

Findings

The three‐dimensional model of effective board governance in Uganda – consisting of control and meetings’ organization, board activity and effective communication – was determined to be the best fitting model. Evidence in support of relevant theories of board governance was adduced.

Research limitations/implications

Although plenty of literature on corporate governance exists, there is scarce literature on effective board governance conceptualization and this together with imprecise terminology regarding this area may have affected the authors’ conceptualization of the study. The authors’ study was limited to the service sector firms registered and operating in Kampala, Uganda and it is possible that their results are only applicable to this sector in Uganda. Nevertheless, policy makers of Uganda dealing with financial markets, academicians, company directors, company owners and even general readers interested in the area of effective board governance might find this paper handy.

Practical implications

The authors believe that application of their model should improve the quality of board governance in Uganda and can also apply to other sectors of Uganda's firms to help avert the problem of ineffective boards as evidenced by consistent firm failures in Uganda. By improving the quality of board governance, Ugandan boards will demonstrate their relevance in company direction and improvement of company value to the benefit of all stakeholders.

Originality/value

The present study provides one of the few studies that have analysed with confirmatory factor analysis (CFA) using AMOS to test effective board governance measurement model and provides a benchmark for Uganda's service firms yearning to leverage the use of their boards.

Citation

Nkundabanyanga, S.K., Ahiauzu, A., Sejjaaka, S.K. and Ntayi, J.M. (2013), "A model for effective board governance in Uganda's services sector firms", Journal of Accounting in Emerging Economies, Vol. 3 No. 2, pp. 125-144. https://doi.org/10.1108/20421161311288857