Corporate Governance Practices and Performances of the Mobile and Data Services Companies in Rwanda

Abstract

The purpose of this study is to establish and document the corporate governance practises and their relationship to performances’ in the mobile and data services companiesin Rwanda. In specific terms the study reviews whether financialdisclosure, executivecompensation, ownershipstructures and legalstructure have any effect or influence on performance of companies. This study employed descriptive survey design. The research was carried out through descriptive survey design because it involves gathering of facts, opinions and views of the employees in the organization about the corporate governance practices.The population of this research consists of all companies registered by the Rwanda Utilities Regulatory Agency. The study used both primary and secondary data. Financial performance (profit before tax) was collected for a period of three years (2010-2012). Data was analyzed using Statistical Package for Social Sciences (SPSS) and results presented in frequency tables to show trend ofthe responses for the various questions posed to the respondents. The data was then analyzed in terms of descriptive statistics like means and percentages. Thestudy findings revealed that financial disclosure was a key determinant of company’s performance or profitability. This was demonstrated by the mean score of responses of the respondents. However financial disclosure was found not to be statistically significant in influencing profitability.Results also showed that executive compensation influenced profitability as this was revealedby the mean score of the responses and the regression. The study findings further establishedthat ownership structures were a key ingredient of company’s performance. Ownership structures were found to be statistically significant.Finally, it was found that legal structure was important to firm’s profitability but was not statistically significant. Following the study findings it is possible to conclude that financial disclosure and executive compensation isa key determinant of company’s performance or profitability. Executive compensation is therefore important because employees get motivated through remunerations and hence improve their performance in furtherance of the profitability of the company. It can be concluded that the companies had put in place management policies that ensured that the companies had objectives, goals and a mission. The study recommends that the management should practice financial transparency by ensuring that the companies follow international financial reporting standards and guidelines in making the annual reports and ensure that they release quarterly performance reports to the public and their business partners. The study also recommends that the effectiveness of the board is very essential in today’s competitive environment for increases firm value. To achieve this, the study recommends that the current board composition be evaluated to rate its effectiveness for enhanced quality value and should be well remunerated. The stud y recommends that the companies should have a legal structure in place to ensure that legal tussles are resolved out of court. This study recommends that there is need for the companies to assess the characteristics of the board for it has a material impact on the quality of corporate governance. This will help in the realization of challenges or other hindrances that may hinder the functionality of the board and by extension the company performance.