Board governance quality and risk disclosure compliance among financial institutions in Uganda
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Date
2020
Journal Title
Journal ISSN
Volume Title
Publisher
Journal of Asian Business and Economic Studies
Abstract
This paper aims to examine the impact of board governance quality (BGQ) and its mechanisms,
namely board activity, board independence, board communication and board expertise, on the level of risk
disclosure compliance (RDC) among financial institutions (FIs) in Uganda.
Design/methodology/approach – The study adopts a cross-sectional design where data are collected
through a questionnaire survey and audited financial statements of 83 FIs. The authors employ partial least
square structural equation modeling (SmartPLS32.7) to test hypotheses.
Findings – The authors find that the level of RDC in Ugandan FIs is low. Further, the study finds the positive
relation between BGQ and RDC. Moreover, the authors find that RDC is positively and significantly related
with board activity, board independence, board communication and board expertise. Furthermore, the
authors find that the level of RDC is positively and significantly related to ownership type, firmsize and board
size, respectively. Nevertheless, industry type, number of branches and firm age are insignificantly related
to RDC.
Practical implications – The study provides relevant insights into regulators and policy makers with early
symptoms of potential problems regarding weak board governance in FIs. Policy makers may also use these
findings as a guideline tool for improving existing board governance frameworks in place and development of
new disclosure policies. In addition, the study provides an input into the review and amendments of existing
corporate governance codes for the regulators.
Originality/value – This study offers the empirical evidence on the nexus between BGQ and RDC of FIs in
Uganda. Moreover, the study also offers evidence on how BGQ mechanisms impact RDC. The study also
further adds theoretical foundations to the RDC literature.
Description
Keywords
Financial institutions, Board governance quality, Risk disclosure compliance, Uganda, Agency theory
Citation
Nkuutu, G., Ntayi, J. M., Nkote, I. N., Munene, J., & Kaberuka, W. (2020). Board governance quality and risk disclosure compliance among financial institutions in Uganda. Journal of Asian Business and Economic Studies. DOI 10.1108/JABES-04-2020-0036