Internal Control, Corporate Governance, and Performance of Public Enterprises in Uganda
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Date
2025-12-02
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Makerere University Business School
Abstract
The study examined the relationship between internal control systems, corporate governance, and the financial performance of public enterprises in Uganda. Public enterprises play a critical role in national development by providing essential services, creating employment, and contributing to economic growth. The study was guided by three objectives: to assess the relationship between internal control and financial performance, to examine the relationship between corporate governance and financial performance, and to determine the combined effect of internal control and corporate governance on overall enterprise performance. A cross-sectional survey design was employed, with data collected from 60 managers representing 50 state-owned enterprises using structured questionnaires. Internal control was measured through control environment, control activities, information systems and communication, monitoring, and documentation/feedback, while corporate governance was assessed via board competencies, board composition, and board size. Financial performance was evaluated using profitability and liquidity indicators. Data were analyzed using factor analysis, correlation, and regression techniques via SPSS, with validity and reliability confirmed through Cronbach’s α values above 0.80 and content validity indices exceeding 0.85. Findings revealed statistically significant positive correlations between internal control and financial performance (r = 0.384, p < 0.01), corporate governance and financial performance (r = 0.479, p < 0.01), and internal control and corporate governance (r = 0.641, p < 0.01). Regression analysis indicated that corporate governance was a significant predictor of financial performance (β = 0.395, p < 0.05), whereas internal control alone was not (β = 0.130, p > 0.05). Combined, internal control and corporate governance explained 21.4% of the variation in financial performance (Adjusted R² = 0.214, F = 8.973, p < 0.001), highlighting their joint influence. Strong corporate governance was fo.und to amplify the effectiveness of internal control systems, suggesting that boards with appropriate competencies, optimal size, and clear oversight structures are critical for translating control mechanisms into improved financial outcomes. The study concludes that integrating robust internal control systems within strong corporate governance frameworks enhances accountability, operational efficiency, and financial sustainability in Uganda’s public enterprises. The findings provide empirical evidence for policymakers, regulators, and managers seeking to strengthen governance and control practices to improve service delivery, resource management, and overall enterprise performance. Recommendations include optimizing board competencies and composition, investing in monitoring and information systems, and ensuring consistent enforcement of internal controls under effective governance oversight.
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This is a master's thesis.
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Citation
Gwaidi, M. (2025) Internal Control, Corporate Governance, and Performance of Public Enterprises in Uganda. (Unpublished master’s dissertation). Makerere University Business School, Kampala, Uganda.