Corporate governance and financial performance of small and medium enterprises in Uganda:

Abstract

This study examined the effect of corporate governance on financial performance. The study was guided by the following objectives notably; to establish the relationship between firm size and financial performance; to establish the relationship between firm age and financial performance and to establish the relationship between firm growth and financial performance. The study used a cross sectional research design, and a quantitative approach. Data was collected from 40 businesses as a target population consisting of financial services, wholesale and retail shops, ICT, stationary shops, agriculture and drug shops. Data were collected with the aid of closed ended questionnaire and analyzed using Statistical Packages for Social Sciences. Frequency tables, descriptive statistics (mean and standard deviation), reliability, validity, correlation, and regression results were obtained using SPSS v20. The study findings revealed that there is a positive and a significant effect of firm size on financial performance, firm age on financial performance, and firm growth on financial performance. To ensure improvement in the financial performance of Small and Medium Enterprises, the study recommended that managers in SMEs should identify and assess potential risks to the business, both internal and external by implementing risk mitigation strategies and contingency plans. This would also equip them with the ability to analyze complex situations and effectively utilize available resources to solve eminent problems. Finally, the research concludes that among the studded variables of which all have got a positive significance, more is realized in firm size and firm age compared to firm growth therefore more efforts are needed in the identified areas by SMEs