An investigation of the impact of corporate governance practices on the financial performance of tier 3 public enterprises in Namibia
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Date
2021
Authors
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Publisher
University of Namibia
Abstract
Tier 3 Public Enterprises in Namibia have been hampered by corporate governance
problems and rely heavily on government financial injection to sustain their
operations. PEs in Namibia continuously make losses. Thus, becoming a burden to the government. Poor corporate governance practices have been singled out as one of the major causes for the bad financial situation at tier 3 PEs. This study aimed to
investigate the impact of corporate governance practices on the financial performance of tier 3 PEs, as their performance has a significant impact on the Namibian economy.
Board size, board committees and board meetings were used as corporate governance measures. Financial performance was measured using the Return on Assets (ROA),using ROA as a financial measure is practical as it measures the profitability of PEs as a whole in relation to the assets employed. ROA is also referred to as the return on investment (ROI). A return on the investment made into these PEs by Government has to be measured. Thus, ROA was best suited to be used as a measure of financial performance for this study. The study applied a panel data analysis approach.
The population consisted of all (10) tier 3 PEs, as per the Government Gazette of the Republic of Namibia dated 31 May 2013. Secondary data were only being collected for nine tier 3 PEs for the period of 2011 to 2018, as this was the period that all annual financial reports were available for all the tier 3 PEs. The data were captured using Microsoft Excel and thereafter transferred to SPSS where linear regression was used to analyse the relationship between the corporate governance and financial
performance. The study revealed that there was statistical significance at a 0.05 level of significance between corporate governance practices and financial performance of tier 3 PEs and the study revealed board meetings and board size were positively correlated to financial performance and board committees had a negative relationship.
The study recommended that tier 3 PEs invest in corporate governance to improve
their financial performance. The study also recommended that adopting corporate
governance should be made mandatory by law. Furthermore, based on the study
findings policy makers are encouraged to increase the number of board meetings and board member at tier 3 PEs as it correlates positively with financial performance. However, it is recommended to reduce the number of board committees at tier 3 PEs.
Description
A thesis submitted in partial fulfilment of the requirements for the Degree of Master of Business Administration (Finance)
Keywords
Financial performance, Corporate governance, Economy