Corporate Governance Practices of Rwandan Large Companies

Chapter 1: Overview

The present qualitative study explored Rwandan large capitalized companies’ corporate governance practices.  Experiences gained by the researcher from working as a former Chief Executive Officer for two large Rwandan companies and having served on the boards of several companies in Rwanda were the motivation behind the research.

Existing literature on corporate governance mainly focuses on developed countries such as South Africa, the United States, Sweden, and the United Kingdom, amongst others, where capital markets and companies have adopted formalcorporate governance mechanisms (Okeahalam&Akinbode, 2003).  The corporate governance role in developing countries is scarcely addressed and should be considered essential, especially in less advanced arcades susceptible to comparable unethical conduct, such as those in the majority of Western countries.  A small number of researchers have attempted to study corporate governance issues in growing countries, predominantly its effect on foreign direct investment, commercial development, and enhancing employment opportunities (Cohen, Dey, & Lys, 2013).

This exploratory study analyzed practices related to corporate governance in a selection of companies in Rwanda.  The private sector is vital to developing countries,such as Rwanda, due to the face that private companies are the major players in the country’s development (Barr, Fafchamps, & Owens, 2003).  Consequently, it becomes imperative to operate effectively.  According to Austen (2007), the key to making sure that business meet objectives in good corporate governance.  The reason for this is that proper corporate governance ensures that the organization is running smoothly to achieve the set goals (Coyle, 2006).  This study inspected the inherent features of corporate governance in Rwandan companies and the practices that affect management in seven nominated Rwandan companies using the case study approach.  Subsequently, this study used best practices and corporate governance principles to analyze them against the international best practice and establish their adequacy. Based on this, a best practice framework relating to corporate governance was developed and aimed at the Rwandan companies. This framework would aid in improving the management of companies in Rwanda and enable themto realize their goals easily (Austin, 2007).

To create a foundation for this analysis, the following sections will express the problem, the purpose of the study, the importance of the research, the research design, the research questions,the assumptions and limitations and the section that clarifies the operational definitions of the research.

Problem Statement

specific study that undertoo kon the perspectives of corporate governance and large companies in Rwanda,even though corporate governance is an essential player in Rwanda’s economy.Poor corporate governance leads to poor performance of companies. The poor performance leads to low investor attraction, low financial leverage and a significant decline in general firm performance (Mwika, 2012). Research on the perspectives of corporate governance is relevant and could be used as a reference point to strongly urge more companies to adopt the principles and practices of corporate governance to better performance.

Good corporate governance has not, until recent times, been a noteworthy worry in Rwanda.  This is reflective of the organizations’ being primarily owned by families, the private sector’s small size, the nonexistence of capital markets to trade shares in, and the history of the state’s dominance in business.  Generally, there are relatively few large companies, in small economies such as Rwanda, regarding which, matters concerning director liability and of shareholder rights are applicable (Kayihura, 2013).  Conversely, with the current move towards an economy that is market-based, both the private sector and government are establishing a more protuberant emphasis on the standards under which good corporate governance is determined, and there are a plethora of innovative undertakings in progress to enhance them(Kayihura, 2013; Kayitesi, 2013).

A further justification for the research in this study is the inconsistencies this researcher noted in the existing literature in this field.  For instance, Solomon (2010) acknowledged the need, in several African developing countries, for the progress in systems of corporate governance partly due to progressively globalized economy pressures, democratization, and implementation of economic reforms led by World Bank and the International Monetary Fund (IMF).  Other researchers have noted additional reasons for the required corporate governance evolution, including lessons learned from western financial disgraces in the recent past (Ahunwan, 2002; Gugler, Mueller, &Yurtoglu, 2003; Rabelo& Vasconcelos, 2002) in addition to the essential foreign investment attraction (Ahunwan, 2002; Okpara, 2011; Reed, 2002).  However, Rwegasira (2000) argues against the corporate governance concept being the most significant answer for emerging economies, the reason being that several of the problems faced by these nations’ relate to low per capita incomes, regimes that are politically unstable, diseases, and so on.  These problems call for solutions that are additionally intricate as opposed to the simple adoption of concepts in corporate governance.

In brief, the principal inspiration for this study was the identified gap in knowledge resulting from the literature review carried out.  The researcher identified limited amounts of studies previously directed towards companies in Rwanda about governance.

Purpose of Research

The purpose of the study is evaluated in two ways: its relevance socially and scientifically.  The scientific significance concerns the impact of exploration on the assemblage of information gathered.  The social implication involves the utilization to which the result of the current study’s research will be.The social pertinence is undeniably connected to the noteworthiness of the corporate governance phenomenon generally and to Rwanda specifically.

Corporate governance arises from its impact on a company’s capacity to distribute assets proficiently, draw in low-cost capital efficiently, and achieve extended haul manageability.  Advancement of the private segment, which is seen as the “motor of development”, relies upon, in addition to other things, the unfaltering supply of long-haul capital, for which the viability of corporate governance is a primary factor (Organization for Economic Cooperation and Development [OECD], 1999; World Bank, 2000).  Emerging nations such as Rwanda confront the difficult task of pulling in the foreign capital likely to fuel the economy.  According to Sebora and Rubach (1998), enhancing corporate governance adds to the enhancement of a nation’s aggressiveness in pulling in the foreign capital.  To support and boost additional inflows into the country, issues relating to corporate governance need to be handled.  The following research work was helpful in improving the attractiveness of the economy by inspiring investment by local entrepreneurs and drawing investments from foreigners.  Thiswas achieved through pertinent knowledge accumulation and appropriate improvements recommendations on corporate governance.  The aspect is term as this study’s social relevance.

The efficiency with which wealth is distributed in the economy is affected by corporate governance (Clarke & Clegg, 1998; OECD, 1999; OECD, 2004; World Bank, 2000).  Choices about ventures made by enterprises are resolved inside the system of their administrative structures.  This suggests to the degree that organizations dispense assets in the economy, their productive allotment relies upon the adequacy of their corporate governance frameworks.  Looking into corporate governance in Rwanda, and prescribing change measures, will enhance the portion of assets in the Rwandan economy and thus will contribute towards the nation’s financial and social advancement.  This is additionally a component of the social significance of this study.

In spite of having been perceived for more than two hundred years as an essential issue, corporate governance studies are generally recent (Kampire, 2012; Nzafashwanayo, 2016b;Raissa, 2014), and the more significant part of this studies have occurred in developed nations.  There are a restricted number of studies involving corporate governance in developing countries (Rwegasira, 2000; World Bank, 2000).  Therefore, the researcher’s goal was that this study would expand interest and initiate a procedure of looking for better practices inside the limits of the Rwandan setting.

Therefore, there exists a need to examine and contrast the practices of corporate governance in selected companies in Rwanda against principles of corporate governance in major western companies to define their applicability and subsequent development of organizational governance frameworks relating to best practices in Rwanda.

The significance of the Study

Regulators and policymakers progressively perceive the importance of corporate governance for the Rwanda economy improvement.  The study desires to supplement additional information to the current knowledge, on the corporate governance in the developing countries, especially the seven companies selected for the study in Rwanda, thus establishing the scientific significance of the study.

Private operations and shareholding in an economy that is market-based, are viewed as more compelling in controlling administration than government shareholding in a framework that is centrally managed (Bagachwa, Mbele, &Van Arkadie, 1992).  The introduction of new company law, by the Rwanda Development Board, guiding principles for Rwanda corporate governance and the advancement and proposal of standards for successful corporate administration by the early Rwanda Capital Markets Specialist are further signs that corporate administration is starting to get expanded consideration.  Regulators and policymakers see the reception of the prescribed practices as an essential stride in affecting the conduct of supervisors and executives as to the successful release of their advancing investor interests’ roles (Mwika 2012).

The declaration of viable corporate administration standards and the exchange of proprietorship from state to private investors are enormous improvements.  However, for a successful arrangement of corporate governance to develop, facts are required, which can provide the foundation for choices and ventures to be actualized.  Lamentably, there are limited studies aimed at highlighting the causes of operational corporate governance in Rwanda.  Kiure (2002) found that practices relating to corporate governance were found to impact investment choices.  Nevertheless, her study did not take into consideration the viability of these practices in a Rwandan setting.

Table 1 demonstrates that the  Foreign Direct Investment streams to the seven firms in Rwanda have been expanding the most recent seven years, yet that there have been additional substantial variances.

Table 1

Foreign Direct Investment Flows to Rwanda

Year Value
2009 $118.67
2010 $42.33
2011 $106.21
2012 $159.81
2013 $110.78
2014 $167.72
2015 $225.24

Source: International Financial Statistics (IFS), International Monetary Fund (IMF), and Balance of Payment Statistics

Research Design

According to Yin (1994), the design of the study ought to constitute a rational succession that associates the experiential information to an investigation’s underlying examination inquiries and eventually to its findings.  It comprises of two diverse, yet related, arrangements of exercises: the main set of activities (i.e., the conceptual component) focuses on the inquiries to be investigated in the study to realize the study’s goal.  The second arrangement of exercises focuses on how one will gather applicable information to answer the study’s questions, as determined in the initial segment (Verschuren&Doreeward, 1999).

In effect the second piece of the study’s outline, the researcher ought to conform to a logical system that is characterized as a casual yet strict arrangement of principles that has advanced to guarantee the uprightness, consistent quality, and reproducibility of the work in the research (Remenyi et al., 1998).  The study questions impact the study’s design.  Research on case studies is believed to be suitable in circumstances where what and howitems are postured (Perry, 1998b; Yin, 2009).  In this research, the study problem is, in a general sense, a how question.  Case study analysis is most appropriate for a researcher whose interest is to comprehend events that are dynamic and modern and that one exhibits practically no power over (Neuman, 2010).  The technique of using case study gives an extraordinary scope of itemized information about what is occurring within the private sector in Rwanda.

Concerning the current study, the conceptual component was addressed by determining the focal research question.  The detailing of the focal research question for this exploration leaves room for understanding in the matter of how to treat and approach it: prescriptively or descriptively.  An authoritative translation infers giving a remedy and contains a more opinion-oriented or normative response to the study question. The latter approach prompts a depiction of the determinants as established from practice in the current circumstance.  Such a response would likely mirror a desire that may not deal with in the practical reality.

The decision, in this study, was made to utilize a portrayal of the determinants as found in the present circumstance in Rwanda.  A depiction of practices enables an examination to be performed in light of the everyday actuality to come to sensible conclusions.

The study gathered information about this study, from numerous contextual investigations, an approach thatis thought to be more vigorous (Harriot & Firestone, 1983) and that advances results that are all the more effective (Parkhe, 1993) and convincing (Yin, 2009).  Additionally, contextual analyses are reasonable for portrayal and examination of phenomena that are complex and can be utilized for developing themes (Patton, 2002).  Several detailed studies give a complete assortment of confirmation and use annual reports, observation, and theory of triangulation proof in accomplishing a qualitative meticulousness (Yin, 2009).

Research Questions

Well formulated study questions facilitate and support a study remaining on the course (Punch, 2005).  The statement is right bearing in mind that studies can be complicated and problematic.  Seven study questions have, for this study’s successful conclusion, been established from reviewing the related literature.  The seven questions relating to the study are:

R1.  What is the role of the shareholders in governing the company?

R2.  How are the boards of companies constituted?

R3.  How are the boards set up, how do we function, and how are we held accountable?

R4.  What do corporate governance challengeslarge Rwandan companies encounter?

R5.  What boards of directors’ culture prevails in large Rwandan companies?

R6.  How effective is corporate governance today and which factors help determine the effectiveness found?

R7.  What are relevant issues relevant for the further corporate governance improvement in Rwanda? (Ndungu, 2016)

Assumptions and Limitations

Assumptions.The broader assumptions of the study are categorizedin to three sections:

Methodological, topic-specific and instrument,The methodological assumption is that practices relating to corporate governance directly affect some of the organizational tactical decision.  They consist of the appropriations by the researcher regarding the methods used in the process of qualitative research (Creswell 2003),but three possible exceptions to this assumption must be kept in mind.  First, it is possible that corporate governance practices have only indirectly affected the performance of an organization.  Second, it is conceivable that causality goes a different way, such as that the company’s performance clarifies the reception of certain administrative practices.  Third, there are additionally vital difficulties in measuring the company’s budgetary execution as measuring and analyzing corporate administration viability between firms from various administration scenarios (Nanka-Bruce, 2009).

Rwanda is being transformed from the past of the government in business dominance and absence of a capital market to market-based economy.  There are multiple perspectives on the theory of the firm and consequently on the corporate governance phenomenon. As a result, there are no agreed definitions or boundaries for investigating corporate governance (Turnbull 2000). This move speaks to an adjustment in the beliefs behind the society’s organization, comprising corporate governance and an acknowledgment of the suppositions made in the progressive point of view.  Thissuggests thatpossible points of view starting from the liberal viewpoint of corporate administration will give an adept medium to researching corporate administration practices in Rwanda.  The decision was made to apply agency speculations and exchange costs, because the fundamental presumptions in these hypotheses, will be surveyed as legitimate for Rwanda.

Moreover, the ways to deal with enhancing the adequacy of corporate administration was supported by and dependent on these hypotheses.  For instance, the Commonwealth Association for Corporate Governance(CACG) and Organization for Economic Cooperation and Development(OECD) standards of corporate administration are, to a great extent, intelligent of these hypotheses, even though the components of partner hypothesis are additionally discussed. The topic-specific assumption made in the research is that the practices of corporate governance are expected to be equal across the companies of the same size. The instrument assumptions made were the ease of gathering information, coding, and using the Nvivo software.

Limitations of the study.There are limitations to this study, which possibly will

have an impact on the conclusions drawn and the extent of generalizations made. Limitations usually occur in areas where one has no control. Some typical restrictions are sample size, methodology constraints, length of the study, and response rate (Carol, 2010).

First, the focus of the study was on large private businesses in Rwanda and not those business enterprises outside of Rwanda.  Further still, no complimentary research was done or was available regarding the corporate governance practices of the small and medium companies in Rwanda. Therefore, no generalizations can be made on all businesses within Rwanda, as well as those in other countries.

Second, the intention was to research more than seven companies but owing to cost and time limitations, examining all the large businesses in Rwanda was not possible.  Ideally, a more representative proportion of the large companies in Rwanda was preferred. However, it would have far exceeded the researcher’s financial and time assets.

Third, not all of the executive management teams and board members were a part of the study.  Data was collected, serving as both management and the board in every one of the seven companies nominated for the study.  A judgmental sampling technique was used to pick the seven companies.Lastly, the respondent’s ages were excludedfrom the figures that were collected since it was determined that such information could have been used to identify respondents inappropriately.

Operational Definitions

The following phrases, as used within the study, are explained here:

Corporate Governanceis defined as the criteria in which corporations are powered, managed and driven for a purpose.  (Coyle, 2006; Institute of Corporate Governance of Uganda, 2008).

Stakeholders are an identifiable group of individuals or organizations with a vested interest (Coyle, 2006).In the stakeholder theory,other parties involved, including employees, customers, suppliers, financiers, communities, governmental bodies, political groups, trade associations, and trade unions. The competitors are countedas stakeholders, withtheirstatus coming from their capacity to affect the firm and its stakeholders. The nature of what constitutes a stakeholder is highly contested (Aytekin, Miles, &Esen, 2013)


This chapter beganbyintroducingthecorporate governance notionandthe practices in Rwandan companies.  It addressed the international significance of corporate governance growth, arguing for its importance in companies and the country’s development in general.Corporategovernanceaims at increasing value and instituting controls in the decision-making of the companies.The problem statement, the purpose of the study, anditscontribution and significancetothethematicfieldofresearchwere explained.  The research design was also presented, stating therelevantquestionstobeaddressed.The chapter concluded bydrawingoutthe study’s limitations and assumptions and defining the operational definitions.

Chapter 2: Literature Review

In the first chapter, a comprehensive summary of this thesis was given through an introduction of the study problem and the research methodology used in to carry out this study.  The current chapter is broken down to six key sections: an outline, a discussion on theoretical orientation of corporate governance, insights from studies on corporate management, corporate governance with in the Rwandan context, and a critique of previous research on corporate governance.  Studying the practices of corporate governance of businesses in Rwanda is based on the literature reviewed.  The final section presents a conclusion to this chapter.

Overview of corporate governance.

According to Nzafashwanayo (2016a), it was in the nineteenth century, when incorporation was then promoted as an approach to restricting legal responsibility, that the idea of corporate governance was devised.  Nevertheless, Okpara (2011) asserts that it was in the 1980s that it more commonly began to be spoken about and used.  Kampire (2012) perceived that the actual starting point for corporate governance discussions was the establishment of the registered company.

The notion of governance has been practiced in both law and economics for centuries,and its meaning has been understood to refer to a collective action, protection of property rights and enforcement of contracts (McNutt, 2010).  Governance has been linked to people functioning within establishments.  Raissa (2014) argues that certain organizations permit achievement of results further than a single person’s reach. However, to attain their goals, it is necessary that organizations be properly governed.

The registration of corporations was supported by the 1844 UK Joint Stock Companies Act.  Subsequently, the separation of control from ownership resulted from the rise of modern corporations (Reyntjens, 2011).  This implied that the owners no longer controlled the companies’ actions since that role was taken up by managers who were professionals (Epstein & Buhovac, 2014).  The result was a rising need for frameworks of corporate governance tosafeguard owners from the professional managers’ actions.  Case in point, the 1855 UK Limited Liability Act was passed,protecting the owners from liability exceeding their investment (Deitelhoff & Wolf, 2010).

The 1980s, which were characterized by failure of individual companies because of poor governance practices and crashes in the stock market in various locations around the world, was the reason why the notion of corporate governance gained prominence during this period (Tricker, 2011).The collapse of corporations was, therefore, the primary driver of change about codes of corporate governance (Chen, Li, & Shapiro, 2011).  A shift in attitude amongst stakeholders and subsequent placement of high-performance expectations on management boards resulted from the 1980s global collapse of business entities.  Additionally, there was also an increasing apprehension that the role of management boards was to ensure effective running of the businesses in the right direction, while the actual position of running the businesses was left to managers (Kamau, 2011).

Nonetheless, the adoption of ideas relating to corporate governance was not only caused by the necessity to prevent the failure of corporates.  Positively, there was developing acknowledgment of improved practices relating to corporate governance role in the country’s development and growth (Strom, D’Espallier, & Mersland, 2014).  Strong connections between management boards’ governance practices within their organizations and the performance of the organizations have been found by various studies (Chakrabarty & Bass, 2014).

Moreover, Gompers carried out a study in the United States based on which Grant, Compaoré, and Mitchell (2014) and established a robust association between higher shareholder performance and great practices related to corporate governance.  The examination likewise uncovered that 66% of investors were set up to invest highly for the shares of organizations that had great practices of corporate governance.  However, Gisselquist (2012) did not uncover any noteworthy connection between the organizations’ performance and their boards’ management.

Corporate governance: from an international viewpoint understanding.The cultural

circumstances and the context cause a variation in definitions (Vermeulen, 2012) and so do the various researchers’ perspectives.  Certain schools of thought argued that maximizing the shareholders’ wealth is a firm’s primary responsibility (Adams, Hermalin, & Weisbach, 2010), whereas additional schools argued that an organization has an obligation to all stakeholders who contribute towards the firm’s success and not only to its shareholders(Tricker & Tricker, 2015).  Despite the similarity in the themes, there emerge differences within the practical corporate governance application in every single individual corporation.  Creating long-term value is the public corporations’ primary mission,and it is accomplished using structures of corporate governance.  The task can be classified into value protection and value creation.  Asiimwe, Number, Basheka, and Ayebale (2015) defined corporate governance as the procedure by which stockholders convince the administration to perform in their interest, therefore giving a level of assurance essential for investment markets to effectively operate. The schools above of thought are echoed the subsequent descriptions.

Corporate governance, as per OECD principles,  refers to a system through which diverse agents control and direct business corporations.  The distribution of responsibilities and rights amongst various corporation participants, for example, managers, stakeholders, shareholders, and the board, are specified by the structures of corporate governance which also lay down the procedures and rules for corporate affairs decision making.  In so doing, corporate governance offers the arrangement through which goals of the business are fixedand the resourcesrequired to attain those goals and performance monitoring (OECD, 2015). In 2015, the OECD asserted that:

Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.

Nevertheless, broader implications are considered to result from corporate, which are critical to the economic and social well-being of a society, as well as its stability and equity.  Thisis well captured by Baker and Anderson (2010).  The stakeholder method is used to examine corporate governance as:

A concern of corporate governance is to maintain the harmony between social and economic objectives, and amongst shared and individual goals.  The structure of management is in place to empower effective utilization of assets and to require responsibility for the stewardship of those assets.  The point is to adjust almost as conceivable the interests of society, organizations and.  The motivating force to enterprises is to accomplish their corporate points and to draw in speculation.  The state’s primary motivation is to dishearten mismanagement and fraud and also to fortify their economies (Cadbury, 2000, p.7).

Corporate governance has turned into a vital component in distinguishing an organization’s qualities and capacities (Norwani, Zam, &Tamby, 2011).  It gives a framework to screen the organization’s performance.  Great corporate governance ought to give great proposals and information to the administration and the board of directors, to encourage effective control and accomplish the company’s goals (OECD, 2004).  Corporate governance was viewed by the Cadbury Committee (1992) as the framework whereby organizations are controlled and coordinated.  In the interim, according to the Corporate Governance Principles (2004) and the OECD (2004), corporate governance can be considered as comprising of the connections between investors (controlling and minority), the board, the administration, and the rest of the partners.  For the most part, these definitions feature the significance of communications among administration systems and the structure required for viable administration.  Chen, Li, and Shapiro (2011) and Deitelhoff and Wolf (2010) recorded that there are four essential instruments of corporate administration: external audit, internal audit, the board of directors, and management.  Consequently, the accomplishment of good governance is based on the roles played by these critical components.  Great instruments, for example, internal audit function, an independent bench of administrators, and active audit committees are looked upon to enable the administration to control their organizations.

The board, being one of the vital segments of an organization, ought to give maximum transparency on an organization’s performance and equally be productive.  The committee, likewise, ought to keep up a sound arrangement of interior control of the business.  This part of an organization requires different groups to complete their effectiveness, for example, external audit, audit committee and an internal audit function (Baker & Anderson, 2010).

Audit committees should, as the board of directors’ operating committee, assume their roles of checking activities carried out by management regarding internal control, financial reporting and risk management to guarantee the achievement of corporate governance (Du Plessis, Hargovan, &Bagaric, 2010).  The audit committee has duties towards the review capacity,and it incorporates the relationship of the association with its evaluators. The audit committee’s adequacy has been the focal point of different specialists’ interests, commonly concerning the connections between the review advisory group and external review.  This relationship is especially vital during the time spent improving the nature of corporate governance framework (Epstein &Buhovac, 2014).

In the meantime, the function of internal audit is in the best position to enable other vital players to comprehend the associations’ internal control framework, the firms’ risk management and the level of consistency with the framework (Suwaidan&Qasim, 2010).  The vast majority of the writing, such as Filatotchev and Wright (2011), archived that the function of internal audit can enhance corporate governance and that the service is expanding its role and becoming more critical with regards to guaranteeing the nature of corporate governance.  Generally, the purpose of the internal audit has not been the point of concentration about reactions to corporate scandals and breakdown.  In any case, these days the use of internal review has been viewed as one of the key components in enhancing the frameworks of internal control and business detailing (Giroud& Mueller, 2010).  Research has additionally uncovered the capacity of the function of internal audit to add to the nature of corporate governance through its role in oversight and its upgrades to the environmental monitoring and control (Gisselquist, 2012).

The audits carried out externally fill an essential economic need and assume a crucial part in serving the general population enthusiasm by fortifying confidence and trust in reporting of financials.  An independent check of the data given by agents and of work done by the agents is provided by an external audit, thus maintaining trust and confidence.  As needs are, the interests of the investors can be secured.  The external audit reporting ought to, given its essential roles, consider other mechanisms of governance to accomplish high quality of financial reporting and adequacy in audits (Grant, Compaoré, & Mitchell, 2014).

In the long run, these key instruments in governance assume critical roles in enhancing the framework of management and additionally the financial reporting quality (Berg &Jensen, 2012.  Accordingly, these important mechanisms interactions are especially vital in improving the general structure of control and in guaranteeing that financial reports of the highest quality are delivered to the stakeholders.

Principles of corporate governance:According to Kamau (2011), no globally accepted

codes of policies can be applied to cover frameworks. Departmental governance instructions are established as a guiding principle instead of instructions that may be practically utilized in various markets and counties (Kampire, 2012).

The 1980s failures of corporations led to the development of the Cadbury Code (1992).  It suggested alterations to procedures and frameworks of boards to offer accountability to investors by the firms, by recommending the introduction of board committees, a separation of the CEO and chairman and an increasing the count of independent board administrators (Nzafashwanayo, 2016a).

Effective corporate governance.The standards of organizational governance effectiveness, issued in 1999 by the OECD and later refreshed in 2004, are sorted out under six titles: guaranteeing the foundation for a compelling organizational governance structure, the privileges of investors, fair treatment of all investors, the corporate governance roles of stakeholders, disclosure, and the board of directors’ obligations (OECD, 2004).  The leading standard, presented in the modified set of rules, which was released in 2004, talks about the institutional frameworks and the system of corporate governance.  Each of these standards is discussed below (OECD, 2004).

Guaranteeing the foundation for a compelling corporate governance structure.This

the standard was dealt with independently in the amended set of standards and expected nations to advance the rule of law, efficient and transparent markets, and undoubtedly explained the separation of obligations among the various regulatory, enforcement and supervisory specialists (OECD, 2004).  The guideline necessitates a structure of corporate governance to be produced with an aim to its effect on the general participants of the market and the advancement of markets that are efficient and transparent.  The guideline generally seems to empower responsibility among those organizations that have a corporate governance bearing.  A clear division of duties between authorities is desiredto guarantee the general public’s interests are served (Osborne, 2010).  The matters of enforcement authorities, resources, regulatory, and supervisory integrity are, likewise, verbalized in this guideline.

Essential ownership functions and Investors’ rights.  The good corporate governance

standards perceive the property privileges of investors and endeavor to elucidate them.  These, additionally, incorporate the privileges to partake in organization profits, contribute and vote at general meetings, secure ways of ownership, elect board members, acquire relevant data on the organization in a consistent and timely manner, and transfer or convey.  Inserted in the privileges of investors is the idea of shareholders corporation ownership (Peters, 2012).  The possession rights offer ascent to various rights.  The privilege of data on the company aims at enabling the making of decisions concerning the company’s control.  The shares are purchasing or offering mirrors the affirmation of the authority that can be practiced through the market for corporate power and surmises the presence of such a demand.

Impartial management of investors.  The standards of OECD (1999; 2004) express that

the system of corporate governance ought to guarantee the fair treatment of all investors, including the different and minority.  In this regard, the guideline requires the authorization and implementation of laws that give satisfactory assurance of the investor rights.  Protection of investors streams from the first standard.  Privileges are only considered to be significant if they are safeguarded.  This standard seems to mirror the likelihood of hostile situations between minority investors and organization insiders,such as directors, management, and potentially expansive shareholders, who may team up for fitting control benefits to their advantage (Raissa, 2014).  Accordingly, a system of governance ought to give viable insurance of these interests that are vulnerable.

Corporate Governance Stakeholders.  The expansive OECD membership incorporates

nations that subscribe to the different corporate governance viewpoints (the communitarians and the liberalists).  The standards perceive that it is not only investors that are critical for the organization’s survival. However different partners assume a vital part also.  Spitzeck and Hansen (2010) noticed that this guideline ended up being the most questionable amid the advancement of OECD standards.  However, a bargain between the two viewpoints was achieved, a trade-off that perceives the vital stakeholders’ role as the contributors and whose collaboration is fundamental for the sustained survival of the enterprise (Reyntjens, 2011).  Be that as it may, new stakeholders’ rights relating to governance were neither lessened nor created.  They had dependably existed in the system of corporate governance because it was assumed that the laws protected the rights of the stakeholders (Spitzeck& Hansen, 2010).

It is additionally noticed that partners ought to be compensated when their rights are abused. Moreover, the system of corporate governance ought to develop instruments that improve the participation of stakeholders.  For instance, workers’ interests ought to be safeguarded and they ought to have the privilege to get to data (OECD, 2015).

Disclosure and transparency.  This OECD standard underscores the significance of

straightforwardness.  Divulgence is considered as a vital feature in transparency accomplishment.  This is a necessity in achieving corporate governance that is compelling.  The revelation of every material issue in regards to the organization, including corporate targets, budgetary reports, material issues including different partners, real proprietors, and voting rights are enunciated in this guideline.  The significance of applying great audit and bookkeeping models is additionally accentuated (OECD, 2015).

This guideline tends to the issue of the asymmetry in data that is present amongst the insiders (directors and management) of an organization and the stakeholders and investors of an organization (Reyntjens, 2011).  The guideline is intended to urge insiders within corporates to reveal material data that is valuable in assessing their performance and additionally in the deciding of the company’s future.  In any case, this point of view, to a great extent, requires corporate governance orientation by an outsider.  This, likewise, incorporates alternate stakeholders who are perceived as meriting data for purposes of governance (Sison, 2012).

The board’s responsibility.The OECD guidelines, also talk about the role played by the

board of directors and outlines what is required for the jury to execute its mandate effectively.  The board members’ independence recognition was acknowledged in closely held companies as well as in those that are widely held (OECD, 2015).

Board executives are additionally called upon to act with due meticulousness while practicing unbiasedness regarding classes of stakeholders and investors.They are expected to work with reasonableness towards all partners.  The standards additionally plot the console capacities identified with compelling observing of the performance of management (Sison, 2008.  These tasks are as per the following: (i) checking on and controlling business plans, risk policy, corporate strategy, annual budgets, and significant plans of action;

(ii) supervision of the most critical investment outflow, attainments, and divestitures, observing execution, setting goals related to performance, and performance of the organization;

(iii) choosing, reimbursing, watching, and, when vital, supplanting key administrators and supervising planning of succession;

(iv) investigating key official and board compensation, and guaranteeing a formal and straightforward process of board selection (Sun, Salama, Hussainey, & Habbash, 2010);

(v) observing and overseeing potential irreconcilable situations of administration, investors, and members  of the board including the mishandling of corporate resources and abuse in transactions with related parties;

(vi) ensuring the honesty of the enterprise’s bookkeeping and money related revealing frameworks, as well as autonomous review and proper frameworks of control (particularly frames for checking risk, budgetary control, and consistency with the law)

(vii) testing the viability of the practices of governance, rolling out improvements as required, and managing the procedure of divulgence and correspondences (Tirole, 2010)

Through this set of guidelines, the OECD is promoting a sum of issues that support the usefulness of the board of directors in carrying out the identified undertakings (OECD, 1999, 2004).  The problems identified include separation of the CEO and chairman roles, the creation of board committees that are independent, and the independence of the board (Tricker & Tricker, 2015)

Effective corporate governance principles.  The CACG, in 1999, released a set of

guidelinesfor the Commonwealth nations’ corporate governance (CACG, 1999).  These guidelines work toward the realization of variousoutcomes, comprising of making certain of the lasting attractiveness of Commonwealth nations in the worldwide market, enhancing the capability to generate employment and wealth, and expanding the efficiency and profitability of Commonwealth nations’ commercial enterprises (Vermeulen, 2012).  It also recognizes the steadiness and trustworthiness of the economic sectors belonging to the Commonwealth, worldwide and nationally.

These standards are likewise linked to the connection between corporates and their different partners: providers of finances, investors, labor unions, management, communities, employees, suppliers, and customers.  The CACG corporate governance standards were focused on by the board of directors, as the primary system for tending to the issues of corporate governance (Westphal & Zajac, 2013).  These standards mirror the investors’ excellent quality as the essential recipients of corporate action and as an authentic population.  The CACG standards are organized in fifteen interconnected themes, asking the board to fulfill the following obligations:

  1. Principle one – use judgment, integrity, enterprise and leadership in guiding the business for sustained success.
  2. Principle two – a warrant that, usinga process that is effective and managed, appointments to the board are made providing for a combination of directors that are capable and can convey judgment that is liberated to abide on the process of making decisions.
  3. Principle three – decide the values and purpose of the business and the approach to attain its use and implement its policies to guarantee that it endures and flourishes, and to certify that practices and procedures are established to safeguard the business’s reputation and assets.
  4. Principle four – assess and monitor the execution of business plans, strategies, management performance criteria, and policies.
  5. Principle five – warrant that the company acts by all pertinent regulations, codes of best practice and laws.
  6. Principle six – make sure that there is effective communication between the corporation and stakeholders including investors.
  7. Principle seven – work for the genuine welfares of the corporation stockholders and fully accountable to them.
  8. Principle eight – recognize the company’s stakeholders, both external and internal, and settle on policies, defining the company’s relation to them.
  9. Principle nine – guarantee that no single individual or group of individuals has unrestricted control and that there is a proper board authority and power balance that is, among other things, typically mirrored by the separation of chairman and CEO roles and by devising a poise between non-executive and executive directors.
  10. Principle ten – frequently appraise procedures and processes to warrant the use of structures of internal control so that the capability of making decisions and the precision of its financial results and reporting are sustained at all times to a significant
  11. Principle eleven – frequently evaluate its efficiency and performance incompleteness and that of the different directors, including the CEO.
  12. Principle twelve – assign a chief executive officer and at least partake in the selection of high-ranking management, guarantee the safeguarding and inspiration of the intellectual investment inherent to the business, and warrant that there is sufficient training in the company for employees and management and a plan of high-ranking progression
  13. Principle thirteen – confirm that the systems and technology used in the business are sufficient to correctly run the company so that it stays a significant participant in the industry.
  14. Principle fourteen – recognize the main areas that are risk-prone and critical indicators of performance for the company and observe these issues.
  15. Principle fifteen – guarantee that the business will remain a going concern in the subsequent financial year (CACG guidelines, 1999).

The CACG matters that come into thought are like those deliberated under the OECD corporate governance set of standards that are more extensive in scope.  Because the one-level board framework is recognized in nations that are members, the freedom of the board is of fundamental significance (Whelan, 2012).  It was recommended that a right mix of directors be a mixture of directors who are non-executive and executive and are the position reflective.  A headship framework, as a significant feature underlying effectiveness of the board in the function of control, is similarly promoted.

A reflection on the principles.The points of view on governance of corporates

previously discussed are mirrored in the improvement of two sets of standards for corporate governance being advanced by the CACG and OECD.  The OECD standards take a central path as far as not being solely oriented towards investors as seen by the acknowledgment of different partners in governance frameworks, for example, the board of directors.  These standards mirror the decent variety of nations involved in the improvement and appropriation of such measures; they are more extensive both as far as scope and constituencies acknowledged in the processes of corporate governance (Williamson, 2010).

The standards talk about the structure of governance, a key mechanism of management, the different stakeholders’ roles, and the board of directors. These standards support changes inside the structures of the current models.  They additionally tend to urge approaches that are market-oriented to the organization’s governance and mirror the impact of Anglo-Saxon nations in the advancement of such standards (Change, 2012).

The standards of the CACG are all the more unequivocally slanted towards the investor model and take a conventional perspective of directors as delegates of investors.  The standards of CACG are proposed to be embraced by nations that have a comparable lawful structure (Tradition of Common Law) that is believed, at any rate in the standard, to accommodate a portion of the issues handled to in the OECD standards.  The rules of the CACG to a great extent address the board’s role and the requirement for it to take on a position in leadership in various zones (Zu &Kaynak, 2012).  This mirrors a conviction that issues of corporate governance in such nations are generally associated with the board’s failure to assume its role of monitoring effectively.  Consequently, it features the conceptualization of issues of corporate governance as far as frail investors and the requirement for boards that are effective.

The two sets of standards talk about factors that decide the viability of the board in the function of control: the constitution of the board, freedom, structure of leadership in the council, committees of the board, and access to data by board executives.

The impacts of the CACG and OECD standards on reform of corporate governance globally are noteworthy.  They have shaped the structure for the different nationwide codes that have been produced in various nations.  Nevertheless, this represents a difficulty, especially in developing countries (Claessens&Yurtoglu, 2013).  Developing countries anxious to draw-in foreign investments risk embracing these standards in a way that may not sufficiently address the current circumstances locally.  In this regard, the remark by Chen, Li, and Shapiro (2011) can be considered as specifically applicable, meaning that its appropriation may not convert into compelling corporate governance(Chung & Zhang, 2011).  These standards should be adjusted to deal with the local circumstance of these nations.

Corporate governance perspectives.Generally, corporate governance is conceptualized

in twofold dissimilar viewpoints: the communitarian and the liberalist/contractarian viewpoints (Bebchuk & Weisbach, 2010).  The system illustrates the assumptions surrounding decision norms, human nature, legitimization, the firm, and social welfare that are perceived as the differentiating proportions.  The system similarly talks about assumptions on the objectives, feared substitutions, organizations’ internal control, and the managers’ roles deliberated to be genuine for a business to follow.  The difference typically mirrors the forms of marketplace economies: the cooperative form that applies to Germanic countries and the competitive Anglo-Saxon models (Ammann, Oesch, & Schmid, 2011).

The perspective of the liberalist.The corporate governance liberalist viewpoint of the

mirrors societal aspectsconcerning the coordination of financial exercises in the traditional/neoclassical radical view.  This point of view regards self-assurance, or the individual’s interests and rights are expected to rule over those of society.  These interests and rights of individuals are likewise anticipated at the level of an organization and ought to be regarded and secured.  These interests and rights are appended to the contribution of the individual to the company’s capital.  This is because the corporate frame started as a method of activating money related assets to complete the matter of the endeavor.  In the meantime, the acknowledgment of the associated risks gave the contributing people the privilege to appreciate the advantages of activity of the company (Mallin, 2011).

The foundation of the liberalist point of view is the assumption that people are self-centered and are encouraged by the craving to expand their fulfillment, and, consequently, the ideas of individualism and utilitarianism emerged (Armstrong, Guay, & Weber, 2010).  This point of view can be found in the Coase’s work (1937, additionally, organizations are in existence to limit the expenses of doing business in markets that are external.  The company is seen as a nexus of agreements, which are arranged and executed by a business visionary in the pursuit of economic objectives.  Different partners are allowed to go into contracts with the management of the corporation.  The role of the legal and administrative systems is to guarantee that these agreements are implemented (Aebi, Sabato, & Schmid, 2012).  Therefore, this point of view is likewise called the contractarian viewpoint.

The perspective of the communitarian.The communitarian viewpoint speaks to an

an alternate corporate governance system that is market-based (Bruno &Claessens, 2010).  This point of view mirrors concerns for the benefit of everyone and endeavors to protect society-based ways to deal with processes of governance including that of enterprises.  The main unique highlight of this viewpoint is the consideration of various distinctive populations in the enterprises’ decision-making procedure (Walls, Berrone, & Phan, 2012).  Two distinct speculations are used to justify and support the communitarian point of view: the theory of instrumental stakeholder and the theory of normative stakeholder (Jo &Harjoto, 2011).

The theory of normative stakeholder accentuates the stakeholding inherent value and perspectives the partners as “the end.”  Aguilera and Jackson (2010) inferred this method in what they named the stake-holding philosophical component.  They illustrated that this component requires everybody in the public arena to take part in the administration of companies.  Whelan (2012) placed that stake-holding speaks to a general feeling of inclusion in the society and economy in which each native is an esteemed part, everybody benefits, and everybody contributes somehow.  This incorporates the procedure of corporate responsibility that is legitimized and strengthened by either money related or palpable enthusiasm for the prosperity of the enterprise or economy.

The hypothesis of normative has its root in the social origination of the enterprise, which goes back to the late nineteenth century.  An enterprise is included in various parts of social life and influences many individuals as far as both estimated risks and welfare.  An organization that is public ought to have specific social commitments, for example, reasonableness, social equity, and employees’ protection (Acharya, Gottschalg, Hahn, & Kehoe, 2013).

Hence, corporate governance is required to address the necessities of various partners (Acharya, Gottschalg, Hahn, & Kehoe, 2013).  The term partner alludes to a comprehensive range of business constituents that have to be taken into consideration in the making of decisions (Adams, Hermalin, &Weisbach, 2010).  Partners are classified into two broad classes: the community and the contractual stakeholders (Spitzeck& Hansen, 2010).  The contractual partners have express contracts with the organization while community partners have implied contracts.

The hypothesis of the instrumental stakeholder concentrates on how partners’ esteem can be connected to enhance efficiency and performance of the corporation.  It regards the partners as a means to an end.  This hypothesis legitimizes the partners’ claims based on stakeholding as a viable means to enhance profitability, productivity, economic success, and competition.  This perspective is conveyed by Campbell who suggests that “I bolster partner hypothesis, not from a left-wing reason of value, but rather because I trust it to be important to grasp how to profit in business” (Aebi, Sabato, & Schmid, 2012, p. 3220).

These authors argued that the collaboration of partner groups, for example, management, customers, stockholders, employees, lenders, and suppliers are vitally and progressively imperative in deciding corporate survival and business achievement.The strategy of the corporation must guarantee that the interests of the partners are joined into, instead of disregarded in, the approach of the corporation(Westphal & Zajac, 2013).  Various recent hypotheses take into consideration an instrumentality alignment in supporting stakeholding.  Jensen’s (2010) partner hypothesis, as a strategy of the business, has a necessaryadjustment.  Baker and Anderson’s (2010) theory of corporate governance, given data innovation (artificial intelligence), additionally has a conducivealliance.  The consideration of partners in management as contended by Michael Porter with a specific end goal to enhance the competitiveness of the US is additionally instrumentalism reflective (Tricker&Tricker, 2015).

Because the company is seen inside the social element viewpoint as a social establishment that is associated, in a natural form, with the political, authentic, and social, the question becomes how its monetary exercises serve society.  As a company owes a feeling of social obligation towards the workers, customers, and the overall population, thus it constitutes a proper disposition to be received by those in business (Spitzeck& Hansen, 2010).  In this regard, the premises given on the viewpoint of the communitarian are not the same as those in the liberalist viewpoint.  Human comprehensive quality is one of the main assumptions: Individuals working in society are molded by the community we live in.  Therefore, social interests must outweigh the benefits of the individual.

The instrumental partner point of view holds the same claim from the common substance hypothesis concerning representation of constituents in the procedures of making decisions in organizations.  It mirrors the conviction that a company should serve various partner interests instead of only investor interests.  The communitarian point of view holds that equity and participation, instead of rivalry, are central to the welfare of the general public (Sison, 2008.  The satisfaction of the necessities of people, molded by the society, is viewed as a critical dimension.  While people are permitted to settle on decisions, such decisions are made inside the larger society’s context instead of concentrating solely on the person.  It is expected that, if people are permitted to make decisions openly, the independence of culture and abuse is probably going to come about (Aguilera & Jackson, 2010).

Management working within a communitarian point of view is required to consider the interests of the scope of partners in the process of making decisions (Whelan, 2012).  These administrators are seen as the stewards of corporate resources for the advantage of partners, instead of as agents working for the investors’ interests as in the former point of view (Giroud& Mueller, 2010).  An important challenge in this point of view is the insufficiency of partners’ interest in the process of governance, which more often than not prompts the utilization of force by a few partners as they endeavor to apply impact over the means of decision-making (Chen, Li, & Shapiro, 2011).

Corporate governance: Rwanda context.

Located in East and Central Africa, Rwanda is the land of a thousand hills, with a total surface area of 26,000 sq. Km.  It is land-locked by, but also linked to, four countries: the Democratic Republic of Congo to the west, Uganda lies to the north, Burundi to the south, and Tanzania to the east (BBC, 2017).

The Rwandan government is comprised of three governance arms:the legislature, judiciary, and executive, all working independently but collectively, with the Republic’s President as the head of the executive arm.  Until 2009, Rwanda had no corporate governance framework but, given the economic progress registered post-2000, the government, together with the private sector federation, reviewed the then laws governing companies and enacted the Company Act of 2009 (Kayitesi, 2013).  Later in 2011, the first law regulating capital markets was enacted together with the law regulating collective investment schemes.

According to the Company Act of 2009, for a company to be registered, its main requirements include the articles of association and the memorandum of association.  Governance of the corporation is mainly provided for in the articles of association, which stipulate the obligations, influences, rights, and duties of stockholders, every director, the business and the board of directors (Kayihura,2013).  Separation of authority, ownership, and control to accomplish the business matters is specified at incorporation and vested in the board.

At the Annual shareholders meeting, as provided for the Memorandum of association, the shareholders implement their right to designate a board of directors (Mwika, 2012).  Like most countries, the governance code provides for directors, both independent and non-independent, to minimize the executive influence of (non-independent) directors.  The shareholders then delegate responsibility to the board of stewardship of the business, who then hire the CEO and his high-ranking directors.  The committee, in consultation with management, provides the strategy and sets in place mechanisms for monitoring performance and implementation of board decisions (Kayihura,2013).

Even though organization law and structures of corporate governance have been in existence since the colonizers of Rwanda introduced the enacted legislation in the late 1800s (Kayitesi, 2013), the idea of “corporate administration” is generally foreign to Rwanda!  It is not astonishing, however, because it viewedstatically as a first-hand idea even in the established areas of the world.  Governance of Rwandan corporates is believed to have evolved into its present state starting with the rise of the privatization drive that began in mid-1996, only twenty-four months after the 1994 disaster of the Genocide against the Tutsis that came to pass in the nation (Kayihura, 2013).

In mid-2000, with the rise of numerous fresh organizations in the enthusiasm of the steady safekeeping circumstance within the nation after every one of the rebellions, another issue developed.  Embarrassments, particularly in the budgetary segment, were frequent.  Numerous financial institutions were pronounced bankrupt earlier or during 2005 because of poorly kept corporate governance.  Highly remarkable ones included the Banque ContinentaleAfricaine, the Bank of Development and Industry, and the Bank of Commerce (Mwika, 2012).

The National Unity government had to intervene to help out some banks, a move that was mainly aimed at benefited depositors’, who had, extraordinarily, emphasized developing a savings culture with the banks, the government was not willing to lose such a culture and therefore, it had to intervene.  In so doing, the CEOs of the banks in question received successful prosecutions whereby they were the majority shareholders in the same banks.  They were exceedingly implicated in the abuse of their directorial and managerial positions in those banks.  This instance was facilitated by the fact that they were taking advantage of their benefit at the expense of minority investors, companies, and depositors. Later on, those banks were acquired by foreign companies, which included FINA Bank and ECOBANK.

Towards the end of 2000, and following the battle to recuperate from the aftermath of the previously stated embarrassments in the commercial segment, various corporate governance controls, particularly in the financial division, were set up.  These controls tended to a portion of the real worries of the society, for example, the amassing of power throughjoining the board chairmanship with the CEO functions, the misuse of office, and self-intrigued dealings (Kayitesi, 2013).

For instance, Article 20 of the corporate governance control of the insurance business by the central bank of Rwanda states the following:

To guide against potential conflict of interest, no individual shareholder with a qualifying holding shall be appointed as a chairman of the Board.  The responsibilities of the Chairman of the board must be clearly separated from that of the Managing Director or Chief Executive Officer to ensure an appropriate balance of power, increased accountability and higher capacity of the Board for independent decision making.

No person shall combine the post of Chairman of the board and Chief Executive Officer of any institution.

The Government of Rwanda had, in 2000, revealed to its people its aspired long-haul advancement objectives as epitomized and labeled “Rwanda’s Vision 2020.”  Within the structures, there existed an accentuation on great governance, within both in the private and public sectors.  This visualization is the light to the nation’s improvement strategy.  From that point forward, it has been claimed by every private and public sector segment.  As of September 2007, Rwanda had distributed what it alluded to as Rwanda’s Economic Development and Poverty Reduction Strategy, whereby the nation reaffirms its sense of duty regarding bolstering the advancement of “soft infrastructure” for the private sector through the execution of business and land enrollment programs, commercial justice, enhancing financial freedom, the licensing and regulatory conditions for carrying out business, and advancing standards of present-day corporate governance. In this manner, an audit of most business laws was startedin 2007 aimed at easing the carrying out of business in Rwanda.  This, nevertheless, did not risk the developing pattern towards grasping great practices of governance, and specifically corporate governance.  In 2009, the new law relating to companies was proclaimed supplanting the 1988 regulations on business ventures in Rwanda.

In the new regulation, as the pattern in guidelines of the government illustrates, corporate governance surfaced without precedent for Rwandan organization codes.  It aimed to reinforce the protection of investors by requiring more prominent corporate revelation, responsibility, expanding the risk to executives, and enhancing investors’ contact with data.  The appropriation of this regulation was one of the variables that enabled Rwanda to be named as the best reformer in the World Bank’s 2010 Doing Business positioning.  To the Rwandan people and government, taking the best position on the world’s rundown of reformers was a reward for their relentless endeavors geared to an economy established in responsibility, accountability, and professionalism.

Legal and regulatory framework.  It is vital for nations to have regulations and laws set

up with the goal that, when different systems are not adequate to guarantee arcade balance, these reforms can be used to assure at least market proficiency and fairness (Asiimwe, NUMBER, Basheka, &Ayebale, 2015).  Administrative bodies set up and execute guidelines and controls, screen consistency, and partake in authorization exercises.  They assume a crucial role in checking investors, administration, the governing body, bookkeepers, money markets, auditors, and establishments.  Regulations and rules are likewise essential to guarantee there is an appropriate harmony between self-intrigue and the interests of the greater majority.  It is, for the most part, recognized that decent corporate governance relies upon sound right direction and implementation.

In Rwanda, the law identified with organizations was revised and approved under law number 07/2009.  This rule was a correction to the 1988 Companies Act and was purposedattending to a few deficiencies, especially concerning corporate budgetary detailing, organizational structure, streamlined business start-up, and reinforced protection of lesser investors.  The organization strategies set out the rules on organization fuse with the distinction between a private, restricted organization and an open constrained organization, limit forces and legitimacy of the Act, and investor rights and commitments alongside others.

Article 6 of the Rwanda company law portrays a limited private organization as that in which there is a limitation on the privileges to offer or exchange stocks, and in which the quantity of investors is restricted to a hundred (workers excluded).  It is likewise disallowed to welcome the general population to subscribe for any offers in the organization.  As per the records from the recorder general of organizations as of May 2012, there is an aggregate of 14,610 enlisted organizations, of which a sum of 55 are open constrained organizations (Bruno &Claessens, 2010).  The lion’s share of organizations in Rwanda is private limited organizations, for the most part, growing and slightly established Enterprises that are singular/family possessed.

There has been increased denationalization of Rwanda by the government in the recent few years. Predominantly the large corporations such as Brasseries et Limonaderies du Rwanda (Bralirwa), the biggest maker of soft drinks and brewer in the country, in which the government ended its quarter-stake of shares, a total of 128,570,000 shares, through an IPO to the public at a value of US $29.5 million.  The government also sold its 45% stake in Banque de Kigali in an IPO to the public at a value of US $62 million.  Progressively, a significant amount of government-owned corporations and private companies are being listed on the investment bazaar.  Besides that, the priority of ownership of these companies is being offered to the country’s citizens as a motivation.  As from 1998, an aggregate of 56 corporations have been wholly denationalized, 20 in the denationalization process, and seven liquidated, adding up to a total of 83 corporations that have been put under the divestiture process by the government.  There was a need in the process to make various changes in the legal framework, including the company laws (Bruno & Claessens, 2010).  This was to ensure investors that they were secured from any consequences while making the investment climate favorable.  Besides that, it made the individuals confident in investing in these companies,and as a result, the government has been able to entice capital inflow and foreign direct investment.

Corporate Governance: From a Theoretical View

Corporate governance is of rising significance, explicitlyconcerning the board of directors’ monitoring role.  Hence, the theoretical viewpoints that are significant to this research are founded on the structures of governance and practices related to reporting that affect the worth of the companies.  This segment appraises the theoretic corporate governance viewpoints that are pertinent to this research (Kamau, 2011).  It derives from various theories including stakeholder, stewardship, resource dependency, social contract, legitimacy, managerial hegemony, transaction cost, and political philosophies.

Agency theory.  Abundant studies into corporate governance have been derived after the

theory of agency.  As from the initial work of Filatotchev and Wright, (2011), separation of control and ownership have been the focus of corporate governance, which when not handled rightly yields issues relating to principal-agent emanating from the distributed proprietorship in the contemporary business.  They regarded corporate governance as an instrument where a board of directors is an essential tool of close-up observing to avoid the complications resulting from the relationship of principal-agent.  In this setting, the managers are the agents, the owners are the principals, and the monitoring mechanism is the board of directors (Nzafashwanayo, 2016).

Additionally, it has been determined that the parting of ownership from control suggests that the qualified managers run a company on the owner’s behalf (Osborne& Ball 2010).  Wars or complications occur when, in the company owners’ viewpoints, the qualified personnel does not run the business to the owners liking (Mallin, 2011).

According to Brammer, Jackson, and Matten (2012), agency theory concerns itself with resolving and analyzing the complications that come about in the relations amongst stockholders/principals and the top management/agents.  The concept dwells on the supposition that the organization’s role is that of wealth maximization for its stockholders/owners (Filatotchev & Wright, 2011).

The agency concept unfolds the fact that a majority of the companies’ function in circumstances of uncertainty and imperfect information.  Such conditionsexpose companies to two complications of the agency, specifically, moral hazard and adverse selection.  Adverse selection transpires in the situation that a principal cannot establish whether an agent precisely embodies his or her capacity to do the function for which he or she is remunerated.  In contrast, moral hazard is a situation in which a principal is not able to ascertain if an agent has given the entire work (Brammer, Jackson, & Matten, 2012).

As per the agency hypothesis, the superior data accessible to proficient administrators empowers them to pick up preference over the company’s proprietors.  Peters (2012) contended that the managers will not attempt to boost investors’ returns but if only suitable administration procedures are actualized to shield the investors’ benefits.

Thisis achieved by utilizing inward,and outer regulatory components, where the appliances that are internal, incorporate the requirement of staff to claim partakes in the corporates they oversee, boards that are well-structured, and investor aligned patterns of compensation (Raissa, 2014).  The mechanisms that are external, conversely, incorporate acquisitions, divestitures, and proprietorship corrections.  They are initiated when the inner systems fall flat.  Along these lines, the agency hypothesis contends that the reason for corporate governance is to limit the potentiality for supervisors to perform in a way that contradicts the comforts of investors.

The organization hypothesis additionally proposes the setting up of principles and motivating forces to adjust the conduct of supervisors to the proprietors’ liking (Tirole, 2010).  Notwithstanding, it is practically difficult to compose an arrangement of tenets for each situation experienced by management.  Thus, the Australian Securities Exchange (ASX) Corporate Governance Council (2007) related todecent corporate governance with individuals of honor.

Spitzeck and Hansen (2010) opined that agency theory is primarily connected by the profit-making associations’ boards to adjust the interests of administration to those of investors. Walls, Berrone, and Phan (2012) contended that the requests of profit-making associations are not the same as those of partners, for example, investors, locality, workers, and clients. The various wantings may be utilized to legitimize activities that others may reprimand as unscrupulous or immoral, contingent upon the company of partners.

The broad utilization of the aspect of agency in corporate governance studies can be ascribed to its straightforwardness, in addition to other things.  It decreases the hierarchical partners into investors and proprietors, each team with well-defined interests (Filatotchev & Wright, 2011).  Further, the hypothesis recognizes that a few people do not relinquish individual benefits for the benefits of others (Zu &Kaynak, 2012).

In synopsis, the concept of agency theory can be ascribed to Coase (1937). However, the ideas behind this theory have been connected to executives and boards since the 1980s.  As indicated by this hypothesis, individuals are self-intrigued instead of philanthropic and can’t be trusted to act to the most significant advantage of others.

In actuality, individuals tend to expand their particular utility.  The theory of agency displays the connection between executives and investors as an agreement (Zu &Kaynak, 2012).  This suggests the activities of chiefs, going about as operators of investors, must be checked to guarantee that they are to the most significant advantage of the investors.

Stewardship theory.  Contrary to the theory of agency, the theory of stewardship offers

a different management model, in which managers are thought of as moral agents acting upon owners’ best interests (Westphal & Zajac, 2013).  The essentials of stewardship theory depend on social psychology, which concentrates on the behavior of administrators.  The steward’s behavior is professional authoritative and collectivistic.  It has a greater convenience than personal selfish activities,and the steward’s demeanor won’t leave from the interests of the association because the steward tries to accomplish the targets of the association (Whelan, 2012).

As indicated by Williamson (2010), where investors’ wealth is improved, the steward’s advantages are boosted as well, in the truth of the matter that a hierarchical accomplishment will tend the majority requirements,and the stewards will have an achievable objective.  He additionally expressed that they make it easier on every beneficiary and other interest groups.  Hence, stewardship supposition is a contention put forward for an association’s performance that satisfies the necessities of the capitalized parties exhibiting dominant performance and unity for changed governance.

The theory of stewardship portrays a firm connection between the administrators and the firm’s success, and accordingly, the stewards ensure and augment investor wealth through the association’s performance.  A steward who promotes performance effectively completes many joint groups in a connection when this group has abilities that are catered for by an expanding wealth of the organization (Zu &Kaynak, 2012).  When the post of the CEO and Chairman is occupied by one individual, the future of the company and the capability to undertake strategies is the responsibility of one person.  As a result, the focus of stewardship hypothesis is on the guidelines that facilitate and involve as contradictory to control and observe (Filatotchev & Wright, 2011).

As a matter of fact, the stewardship hypothesis takes a more unpremeditated perception of the partition of the CEO and chairman’s role and backs the selection of one person for the post of CEO and chairman and most of senior managerial seats rather than of non-official administrative seats (Sun, Salama, Hussainey, &Habbash, 2010).

Stakeholder theory.  Research into corporate administration likewise talks about the

partner hypothesis in connection to firms’ duty to the more extensive group.  A partner is one or gathering of people who shares in the profits and risk exercises of the firm in attaining the destinations of the firm (Du Plessis, Hargovan, &Bagaric, 2010). A comparable view has been advanced by the World Business Council for Sustainable Development (1999), which likewise distinguishes partners as the delegates from work associations, the scholarly community, church, indigenous people groups, human rights gatherings, government and non-administrative associations, investors, representatives, clients/shoppers, providers, groups, and lawmakers.

As indicated by Jo and Harjoto (2011), a company’s target could be accomplishedby adjusting the clashing interests of these different partners.  Hence, an essential part of partner hypothesis is to distinguish the partners for whom an association is mindful.  Any partner is significant if their venture is, in some shape, subject to hazard from the exercises of the association (Grant, Compaoré, & Mitchell, 2014).

Corporate administration outlines are in a position of progress due to the internationalization of major trading centers, bringing about a union of the investor esteem-based way to deal with corporate administration and the partner idea of the corporate administration towards maintainable business frameworks (Ammann, Oesch, & Schmid, 2011).  It can be seen that partner hypothesis is an expansion of the office point of view, where the obligation of the directorate is expanded from investors’ interests to other partners’ interests (Deitelhoff& Wolf, 2010).  Consequently, a thin concentrate on investors has experienced a change and is relied upon to consider a more extensive gathering of partners, for example, those premium gatherings connected to social, ecological, and moral contemplations (Acharya, Gottschalg, Hahn, & Kehoe, 2013).  Thus, partner hypothesis underpins the execution of corporate social responsibility and embraces chance administration arrangements to oversee different interests.

Partner hypothesis commentators contend that meeting partner’s interests likewise opens up a way for debasement, as it provides the operators with the chance to redirect the riches far from the investors to others (Mallin, 2011).  Be that as it may, the ethical point of view of partner hypothesis is that every one of the partners have a privilege to be dealt with reasonably by an association, and chiefs ought to agree with the association for the merits of all partners, paying limited attention to whether the partner administration stimulates better fiscal accomplishment (Du Plessis, Hargovan, &Bagaric, 2010)

Resource dependency theory.  This theory focuses on the role of executives in getting

entry to assets that are basic to the achievement of the firm.  The hypothesis contends that a few firms like to choose chiefs from free associations that have the assets required by the organizations (Chung & Zhang, 2011).  Tricker and Tricker (2015) arranged the directors into four classes, to be specific, insiders, business specialists, bolster experts, and those persuasive in the group.  A firm, depending on the hypothesis, would choose executives from the business specialists (e.g., present or previous CEOs of other benefit making practices), experts (e.g., attorneys, financiers, insurance agency agents, advertising specialists) and people compelling in the group (e.g., political pioneers, individuals from the ministry, pioneers of group benefit associations, college workforce).  For example, the experts earlier mentioned would have the capacity to give access to necessary administrations, for example, credit offices and statutory guidance at reasonable costs (Epstein &Buhovac, 2014).  This hypothesis underpins the preparation of superiors to the many summonses on the description of their capacity to assemble data and system in different ways.

Social contract theory.  One of the alternate speculations looked into incorporate

administration writing is the social contract hypothesis, which considers people to be a progression of social contracts between people from within and within alone (Westphal and Zajac, 2013).  There is a school of thought that seesthe social call as a legally mandatory commitment through which the firm becomes obligated to the general public (Vermeulen, 2012).  Incorporated social contract hypothesis was created by Whelan (2012) as a path for chiefs to settle on ethical choices, which alludes to full-scale social and small-scale social agreements.  The former suggests to the individuals and the aspiration for the business to offer help to the nearby group, and the last indicates a specific style of association.

Legitimacy theory.  Another theory inspected in corporate administration writings is

legitimacy hypothesis.  The legitimacy theory is designated as “a summed up discernment or deduction that the accomplishments of a substance are alluring, acceptable, or befitting with some socially put up charters of standards, qualities, persuasions and definitions” (Osborne, 2010, P.365-366).  Like social contract hypothesis, this theory depends on the thought that there is a social contract between the general public and an association.

A company gets permission to start its duties from the locals and is eventually answerable to its locals pertaining its performance and responsibilities because society at large gives organizations the specialist to claim and utilize natural assets and to contract representatives (Chakrabarty & Bass, 2014). Customarily, incentiveswere viewed as a way of corporate executives.  Be that as it may, as highlighted by the authenticity hypothesis, the benefitis considered to be a comprehensive measure of hierarchical authenticity in the company (Sun, Salama, Hussainey, &Habbash, 2010).

The authenticity hypothesis has put an accentuation on the way that an association must consider the privileges of people in general everywhere, not only the privileges of the financial specialists.  Inability to decide to societal desires may give rise to authorizations being forced as confinements on firms’ operations, resources, and profits for its commodities.  Much observational exploration has applied authenticity hypothesis to consider social and ecological detailing and recommends a connection amongst corporate divulgences and group wishes (Zu &Kaynak, 2012).

Managerial hegemony theory.  As per the administrative authority hypothesis, the

board of executives is a mere statutory addition that assumes an inactive part during the time spent coordinating companies (Osborne, 2010).  It is on this premise the hypothesis considers financial statements as being ineffectual when understanding irreconcilable circumstances that emerge amongst investors and administration groups.  The hypothesisconsidersthe statements as being only “another administration ruled instrument” (Adams, Hermalin, &Weisbach, 2010, p. 76) and an agreeable elastic stamp for administration proposition and choices (Giroud& Mueller, 2010).

The hypothesis contends that the administration groups have unrivaled aptitude and data and that they select executives whose information of the organizations is restricted and who consent in rubberstamping the administration choices (Bruno &Claessens, 2010).  Also, the administration groups restrain the capacity of outer executives, themselves giving less timing to the exercises of the firm, coming up with free conclusions (Adams, Hermalin, &Weisbach, 2010).  Along these lines, the administration groups work under the shadow sheets (Claessens&Yurtoglu, 2013).

Transaction cost theory.As per Raissa (2014), and also Williamson (1996), the

theory on transaction costs depends on the premise that individuals have diverse perspectives and destinations.  Further, a company’s association and structure can decide the expenses of exchanges.  In this way, the hypothesis contends that administrators are going getters and that they utilize the company’s trades as instruments for boosting their interests.

This theory can be implemented in the studies of corporate governance and finance as noted by Williamson (2010).  The approach evaluates the individual investment project works and makes a difference among them in context to the assets, mainly the characteristics.  In this respect, the examples of the non-specific assets are referred to as the re-deployable projects like the investments in the general purpose.  As per this approach, the debts are akin to the markets,and it is a cost-effective method to finance the investments which involve the non-specific assets.  The hierarchical form of the organization may drop out in this application because the firms cannot possess their shareholders.  In this context, Tirole (2010) claimed that the projects could be financed initially with the debts which are considered as the government structures that work in these rules.  The debt-holders can make anticipation regarding the values that can be recovered during the events of the liquidation decline since the assets are less re-deployable.

Political theory.This theory depends on the thinking that a government decides the

distribution of corporate authority, benefits, and benefits.  The hypothesis presents the substantial part of a nation’s legislature in determining the administration outline of firms or their instruments (Hawley & Williams, 1996).  Nonetheless, a few researchers such as Pound (1988), are against the possibility of governments impacting the administration outline of private firms.

Political theory,regarding corporate governance, denotes to the political impact in the structure of companies as a result of the government’s participation in the company’s capital (Peters, 2012).  Thus, political structures are observed as having an essential influence on corporate governance.  This theory focuses on how political favor can impact corporate decisions that are associated with the distribution of corporate powers and profits.  It is noted that, in the UK,several governmental boards make endorsements to develop the corporate governance policies and practices being used by their board of directors.  The political theory also focuses on how governments influence the formation of corporate governance.  The example of Romania is illustrative of this phenomenon (Tirole, 2010).  As per the political theory of organizational governance structure, the governments of different countries are interested in drawing up a framework that results in separation of control and power.

Experiences from Studies on Corporate Governance

The rule clarification encompassing the requirement for corporate administration in creating economies is the desperation to fabricate master budgetary conviction to attract outside and neighborhood dare to develop the trade (Reyntjens, 2011). Worldwide supporter workplaces, for example, the IMF and World Bank and additionally affiliations, for example, the OECD, roundaboutly, affect making countries to upgrade their external corporate organization parts and managerial establishment (Sun, Salama, Hussainey, and Habbash, 2010). The impact of these movements can be found in the exercises of the budgetary masters who are adequately certain to place assets into the risky markets. Regardless, the corporate divisions in rising countries do seem to wait behind the benchmark for a sound corporate organization (Strom, D’Espallier, and Mersland, 2014).

The money related crisis that hit the South East Asian securities trades in 1997-1998 was most of the way credited to the weak corporate organization in the region, which incited governments to consider techniques for upgrading organization structures in their countries (Aebi, Sabato, and Schmid, 2012). This achieved organization changes in creating markets to restore examiner’s conviction by giving a safe institutional stage to manufacture an endeavor feature (Aguilera and Jackson, 2010).Consequently, codes of corporate administration were set up by the vast majority of the rising nations to advance a consistent stream of assets and to help speculator trust in their capital markets (Vermeulen, 2012).  Even though developing markets know about the idea of corporate administration, execution of corporate administration practices has not been viable (Ammann, Oesch, & Schmid, 2011).  The codes, which were gotten from proposals in created nations, may not be relevant to buildingnations because of their national character, and financial and social needs.  Hence, what is compelling in one country may not be so in another.  Similarly, every partnership has its unique qualities because of its history, culture, and business objectives.

Each one of these variables should, therefore, be considered in the push to alter corporate administration (Armstrong, Guay, & Weber, 2010).  As the business condition of the created nations is not quite the same as that of developing countries, the administration structures intended to improve execution should consider the one of a kind business condition that exists in the country without aimlessly implementing the practices from different nations.  For instance, Asiimwe, Number, Basheka, and Ayebale (2015) concluded, from an investigation of Malaysian recorded organizations, that the relevance of proposals got from the Cadbury Report, and Hampel Report in the UK might be questionable because of high possession fixation, close control by proprietors and significant investors, cross-property of offer possession or pyramiding, and the cozy connection between the organizations, banks, and government.

In the rising economies, the nature of open administration decides corporate administration practices.  Besides, with far-reachinginterest amongst lawmakers and business visionaries to extricate or ensure restraining infrastructure benefits, it is impossible that brilliant corporate administration practices will emerge quickly.  Furthermore, this extensivecooperation between entrepreneurs and politicians can be considered as the reason for the need for high-quality corporate governance practices.  The existence of several studies in the developing trading centers which have stated that political influences were treasured by stockholders (Sison, 2012).

An investigation on the link between the OECD and rising South East Asian securities exchanges uncovers that the vacillations cause the changes in the stock exchanges of the developing trading centers in their own particular provincial trade areas as opposed to the variances in the propelled markets (Bebchuk&Weisbach, 2010).  Be that as it may, Baker and Anderson (2010) expressed that securities exchanges can’t utilize the offer returns of a specific marketplace in the locale to foresee the profits of others in the South Asian area.

Developing marketplaces are, at present, experiencing a paradigm shift where a more youthful and more instructed era is assuming control over the privately-owned companies.  They are not just required in executing change managing globalization, culture, and family customs, but at the same time are giving a stable situation to the practicaluse of corporate administration (Chen, Li, & Shapiro, 2011).

Corporate governance: from an empirical perspective.

Muliliand Wong (2011) perceives that emerging nations, particularly in Africa, have

business models that vary from those embraced in advanced countries, mainly due to their different situations.  Chung and Zhang (2011) argue that emerging countries are ill-equipped to adopt the governance simulations in advanced nations owing to aspects such as pitiable governance, weak judicial structures, and theassociation of government in corporations. While Africa is the world’s second biggest and second most populated zone, it has the uppermost amount of individuals living below the poverty line (Change, 2012).

Thirty years’ prior, the average salary in Sub-Saharan Africa was twice that of both South and East Asia.  Africa is presently well beneath a large portion of that of East Asia and lingers a long ways behind the mean in South Asia, Latin America, and the Middle East (Grant, Compaoré, & Mitchell, 2014).  Therefore, corporate administration issues are yet to be of customary worry on the African mainland, which is described by a frail private sector and embryonic Capital Markets (Change, 2012).

As indicated by OECD Principles of Corporate Governance (2004), the corporate administration is a significant instrument in encouraging financial effectiveness and development and promoting speculator certainty.  These standards are focused at speculators, stock trades, organizations, and different gatherings that assume a part in the improvement of commercial markets.

Experimental investigations demonstrate that organizations with sound corporate administration practices have decreased capital costs, more access to financing, and higher return contracted with those that don’t have great corporate administration practices set up.  Sison (2012) noticed that organizations with minimum corporate administration benchmarks have top venture dangers, and markets and stocks with little or low corporate administration are rebuffed.

Spitzeck and Hansen (2010) noticed that great corporate administration practice is not a 100% certification for the accomplishment of an organization, however poor administration frameworks is an unequivocal formula for corporate failure.  They found a need for an urgent assessment to discover the ways companies are directed and run.  This is because it has been noted that, in the 1990s through the 2000s, there had been corporate scandals, big firm collapses, hostile take-overs, careless privatization of enterprises in the communist bloc, along with the emergence of institutional investors.

Dubious administrative conduct in advanced economies has prompted money related misfortunes and the downfall of significant enterprises like Enron and WorldCom.  There are late cases, such as Olympus in Japan, where detailed troubles of $2 billion were concealed, and JP Morgan, where accidents of up to $2 billion were accounted for in Q1 of 2012.  These cases require attention to the need for enhanced and more powerful corporate administration.

These issues are not only limited to developed nations but have happened in developingnations like Rwanda in East Africa.  Even though the more significant part of the recorded instances of corporate administration disappointment has been in the United States, the United Kingdom, and Asia, Africa,and Latin America have likewise had their corporate administration disappointments.  A few illustrations can be taken from bank failures in Rwanda in the 1990s, such asthe Bank of Commerce, Development, and Industry, which had no corporate administration practices set up for its Board of Directors.  The collapse of the Bank of Commerce, Development, and Industry demonstrated that there was no qualification between the administration and the directorate.  These breakdowns showed the disappointment of the authorization of the legal and administrative structure, especially the trustee obligations by the national bank.  These and similarepisodes influenced the capital markets advancement as well as fundamentallyaffected speculator trust in the money related market and the managing an accountability framework.

Utilizing interviews as a technique for the study, Strom, D’Espallier, and Mersland (2014) found that considering the capacity to make a useful commitment to the organization inside and outside the meeting room, and accessible business encounters are the most imperative qualities of compelling non-official executives in Ireland.

Roberts et al. (2005), who additionally concentrate on the independent directors, investigate the adequacy offinancial information through an examination of the work and connections of independent executives.  While different examinations utilize the board piece to quantify competence, Roberts et al. (2005) contend that the real direction of the nonexecutive opposite the official decides board adequacy.

Through meetings with 40 organization executives, Roberts et al. (2005) found that non-administrators’ ability to practice autonomy is the way to dominant board conduct.  The outcomes likewise propose that customary divisions amongst agency and stewardship hypothesis don’t sufficiently mirror the real routine with regards to the chiefs on the board.  The study reasoned that corporate administration change wouldbe tested as it doesn’t bolster the factual adequacy of governance boards.

Interview feedback.Utilizing a longitudinal system, that is, a

participant-observer strategy, Parker (2007) looks at inside administration forms in two non-profit organization governing boards.  Specifically, the study offers insider observational investigations of meeting room conduct and the viability of board working in the chosen organization.  Generally speaking, the outcomes propose that meeting room culture is critical in the administration procedure.  The investigation recommends that the leading style by the executive impacts meeting adequacy, mainly if that style includes casual assistance.  Further, casualness and cleverness are especially imperative in greasing up executives’ interrelationships, correspondence, and union.

Furthermore, Brundin and Nordqvist (2008) led an examination to investigate the part of feelings for board individuals in playing out the board’s control and administration errands.  This investigation concentrates on the extent what happens in the boards as power and status energizers in the meeting room.  The outcomes uncover that power and status are essential for bringing out feelings in connections between board individuals. Emotions are a premise of vitality that impacts board work, and they are persuasive in the board individuals’ undertaking execution.

Finally, Soobaroyen and Mahadeo (2012) directed 24 comprehensive semi-interviews of board individuals in recorded and non-recorded organizations to analyze whether corporate administration necessities affect how responsibility is seen, comprehended, and polished by organization board individuals in Mauritius.  By and large, the discoveries of the investigators propose that individualizing type of trust and individualizing administration in organizations in Mauritius have been created since actualizing the adjustments in its corporate administration.  This as confirmed by a restored familiarity with senior executives’ duties to investors and the utilization of board panels to screen administrative exercises.

Whelan (2012) considered the impact of different corporate administration on the review procedure, including the affectedby the review board of trustees, and found that examiners saw review advisory groups as powerless and incapable in the post-Sarbanes-Oxley Act (SOX) period.  Zu and Kaynak (2012) can be viewed as creators of the pioneer study that straightforwardly catches auditorsencounters concerning their connections with auditing committees and the subsequent impact on the review procedure.  Given their meetings with 36 evaluators, the discoveries showed that examiners discovered review advisory group individuals needed skill and control and, in this way, the inspectors were wary that the review council individuals would be viable.

Similarly, reviewers, as often as possible, discovered review boards to assume an inactive part.  Nonetheless, Peters (2012) analyzed the practices related to the review board of trustees’ gatherings and reasoned that the review council individuals have a consciousness of satisfying their obligations.  They are subject to the work performed by the inner and outside examiners of the organizations to meet the duties.

Through their meetings with the CEO, CFO, boss inner reviewer, accomplice accountable for the outer review engagement, executive of the review advisory group, and review panel individuals, they found that review board of trustees individuals put noteworthy consideration on a couple of issues amid gatherings, such as the precision of money related proclamations, suitability of the wording utilized as a part of budgetary reports, adequacy of inside controls, and the nature of the work performed by inspectors. They also found that the individuals pose testing inquiries and evaluate reactions gave by executives and evaluators amid the gatherings.

In an augmentation of a previous study, Raissa (2014) performed additionalinterviews in the year 2004 with a specific end goal to build up comprehension of how the falls at Enron and Andersen affected participants’ feeling of review board viability.  From the interviews, Raissa found that the participant’s designs of significance with respect to review board of trustees’ viability are built through four classes of procedures: the foundation of review council individuals, formal components of review panel gatherings, intelligent elucidations of substantive practices and exercises occurring amid review advisory group gatherings, and intelligent understandings of other informal works done outside the board.  They inferred that review advisory group individuals do different practices to wind up noticeably comfortable with their organization’s interior controls.

Findings from empirical data analysis. Afterward, Sun, Salama, Hussainey,

and Habbash (2010) directed a contextual analysis at the UK recorded financial organizations to look at the conditions and procedures influencing the operation and potential adequacy of review boards of trustees.  The discoveries uncovered that review advisory groups had constrained parts in inward control matters because of their absence of definite information.  Notwithstanding, the investigation confirms the essentialness of casual procedures around the review board of trustees through which concerns may be raised.  The discoveries additionally archive the impact of review councils’ energy on other administration members and also the significance of the connection between the reviews panels with the inward review capacities and outer examiners.

In support of Adams, Hermalin, and Weisbach’s (2010) proposal for more personal research on the review advisory group process, Beasley,Carcello, Hermanson, and Neal(2009) utilized the meeting as a strategy to inspect audit committee oversight forms in the post-SOX time inside 42 US open organizations.  Through the meetings, the researchers found that review advisory groups have great collaborations with internalaudit review and external audit in evaluating the adequacy of inward control of the associations.  Also, sometimes, there is confirmation of audit committees performing stylized parts.

Nonetheless, general review advisory group individuals saw that review board have the necessary money related mastery, meet regularly and for long eras, and pose testing inquiries of administration.  Moreover, a recent interview with auditors was performed by Cohen,Krishnamoorthy, and Wright(2010) to gather additional information on the review procedure and the communications amongst examiners and other corporate administration parties in the post-SOX condition.  Findings determined that evaluators demonstrate noteworthy changes in the corporate administration condition.  In contrast to the results fromDeitelhoff and Wolf’s (2010) study, the researchers noted that review boards have more prominent mastery and power in satisfying their obligations.  The review panel individuals additionally assume unique parts in regulating intuitive controls, concentrating on revealing quality, recognizing dangers, posing testing inquiries, and managing the whistleblowing procedure.

Comparable results have been found by Salleh and Stewart (2012), who led a contextual analysis in seven open recorded organizations in Malaysia and found that trustees board committeesespecially the audit committee give help with settling question amongst administration and examiners when the issue is extremely material.  The understanding of their duties, familiarity with potentialproblems, and the individuals’ bookkeeping and business mastery are the fundamental factors that add to review boards of trustees going about as an arbiter.

More recently, Cohen et al. (2013)  provided insight into the adequacy of the SOX by leading interviews with 22 experienced executives from the US.  Specifically, the examination inspects executives’ encounters of the effect of the SOX on the connection between review council, outside evaluator, and administration, alongside its effect on internal review, monetary announcing quality, and corporate hazard taking.  In view of the meetings, the proof uncovers that the review advisory group has accepted the checking part required by the SOX.  Further, the discoveries recorded that the SOX had emphatically affected the nature of money related revealing.  This finding is indirectly upheld by the decrease in significant fraud since the foundation of the Act.  The Sarbanes-Oxley Act, notwithstanding, had unfavorably affected corporate hazard taking.

Two studies by Zain and Subramaniam (2007) and Sarens et al. (2009)  provide an additional and more recent understanding of the collaboration between the review panel and inward review in the association.  Generally speaking, these studiesconcluded that the associations between these two instruments are critical in enhancing administration and internal control systems of an association.

Zain and Subramaniam (2007) conductedcomprehensive interviews with the leaders of the internal control in 11 freely recorded organizations in Malaysia to give bits of knowledge on what the internal reviews see of their collaborations with the review council.  This examination is especially imperative as it was directed in a creating nation that is perceived as being portrayed by a dominant separation culture, and consequently, the investigation adds to the existing writing on the communication between review boards with inside review work.

From the meetings, the results showed that the inside review work had constrained casual interchanges and restricted private gatherings with a review board of trustees individuals.  The results of the investigation additionally underscored the significance of the advisory group having clear rules for internalcontrol practices.  It additionally focused on the importance of the advancement of better correspondence and leadership skills among auditors to enhance the connection between the inward review work and the review council.  This investigation has featured a portion of the discoveries that contrast with theusually expected perspectives on the collaborations between inside audit capacities and the audit committees, such as those from Gendron and Bedard (2006) and Sarens et al. (2009).

Concentrating on the communications between review board of trustees and inner review capacities, Sarens et al. (2009) provides insight on (a) what drives the review advisory group to search for the help of the inward review capacity and (b) what makes the inside review work a specialist at giving solace to the review panel.  Inner examiners’ remarkable learning about risk management and inward control, joined with suitable relational and behavioral aptitudes, empowers them to give the solace to the review board of trustees’ individuals.  In their examination, Aebi, Sabato, and Schmid (2012) recommended for longitudinal research to explore how the necessities change for the solace of the review board.  This is similar to the status of the hazard administration and internal control framework and administration’s approach towards dangers and inward controls that change after some time.

While different examinations concentrate on the governing body, review advisory group, and internal review capacity, Filatotchev,and Wright (2011) have led an investigation to see the associations and transaction between the administration and outside review.  Despite the fact that the examinations on this collaboration are expanding, it is still under-studied, with the majority of this exploration concentrating predominantly on the review accomplice.

Specifically, Deitelhoff and Wolf (2010) concentrated on genuine CFO review dyads (the two fundamental arbitrators) in talking about their obligations, connections, and the transaction of a particular issue or issues.  The researchers performedan interview-based field study of the chief financial officer–audit accomplice dyads to examine how the CFOs and their review accomplices portray the transaction of a particular bookkeeping issue.  The discoveries of the examination demonstrate that review firms deal with the task of accomplices to engagements in view of CFO inclinations and the CFO expels the accomplices who are in poor connections

As Aebi, Sabato, and Schmid (2012) saw, there has been no regular way to deal with corporate administration universally.  Nations that take after the Common Law legitimate system, for example, the UK and US have for the most part not been appreciated by the investors.  They have a substantial component for guaranteeing that the supervisors work in light of a legitimate concern for the investors (Kampire, 2012).  This is, to a great extent, in view of the common Law administration, which considers an organization as a legal substance isolate from its proprietor, and existing in ceaselessness, with transferable offers (Spitzeck& Hansen, 2010).

Though corporate administration in the UK is fundamentally in view of Codes of best practice, corporate administration in the US depends on the SOX (Whelan, 2012).  Besides, the dominant part of executives on US corporate boardsis pariahs, while the lion’s share in the UK is insiders (Westphal and Zajac, 2013).

On the other hands, nations that take after the Civil Law legal system, such as France and Germany, have embraced a “partner approach.”  Public organizations have two governing boards.  In Germany, a Supervisory Board chose by investors and representatives on a 1:1 proportion is in charge of administration (Tirole, 2010).  It delegates a Management board that is in charge of the course of the organization.  Conversely, despite the fact that workers are not spoken to on the Supervision Board in France, their delegates go to executive gatherings as eyewitnesses keeping in mind the end goal to guarantee that the interests of partners are taken into account (Zu &Kaynak, 2012).

The Japan display generally concentrates on the assurance of representatives.  The objective of chiefs is to seek after business security for specialists, as opposed to profits for investors.  Therefore, the board is usuallyan extensive inconvenient gathering commanded by insiders.  Banks also have a substantial say in the administration of the companies as they are a noteworthy wellspring of financing.  Asian nations like China and Korea have embraced a family model of corporate administration where large privately-run companies have developed.  The board serves to ensure these family interests and is generally an insider board (Claessens&Yartoglu, 2002).  Be that as it may, these two are encountering change.  For instance, it is presently compulsory for no less than a fourth of board individuals in Korea to be outcasts.

OECD empirical findings. The OECD, created to help nations, especially those with

developing economies, by giving guidance on monetary issues, additionally distributed a Code of Corporate Governance in 1999 and thusly updated it in 2004 and 2014 (OECD, 2012).  The OECD (2012) standards of corporate administration recognize five areas that the organizational governance framework should cover,which are:

  • The insurance of the privileges of investors/proprietors;
  • The impartial treatment of investors/proprietors;
  • The role of the partners, such as identify the opportunity of all associates as set up by law or something else, empower constant change in collaboration amongst companies and partners in creating wealth, employment, and the manageability of fiscally stable endeavors;
  • Disclosure and straightforwardness through timely and precise disclosure on every material issue in favor of the company, including the financial occurrence, execution, proprietorship, and running of the organization;
  • The obligation of the company such as the necessary course of the organization, the compelling checking of administration by the board, and the corporation’s duties to the partnership and its investors/proprietors.

Osborne (2010) contends that the OECD standards are in no way, shape, or form indisputable but, instead, give a general system, empowering states to shape them as per their unique formative encounters to manufacture their own tenets. Coyle (2006), on the other hand,summarizes seven standards from the UK codes that turn out to be exceptionally basic during the time spent corporate administration:

  • Openness, trustworthiness, and straightforwardness. This is the eagerness to give exact and opportune data about how the organization is being run. The proprietors are particularly qualified for refreshed data on the operations of the firm. This would incorporate, in addition to other things, reports from the administration to the board, and from the board to the proprietors, and the general population is approaching adequate data.
  • This is the degree to which strategies and structures are set up so as to limit (or stay away from entirely) potential irreconcilable circumstances that could emerge, for example, mastery of a partnership by an almighty executive, chief, or investor.
  • Since in a partnership people make a move in the interest of others, they should be responsible. This, in this way, brings up issues on what shape and recurrence this responsibility should take. It ought to be adequate, and the different partners should have sufficient structures/roads to authorize this responsibility.
  • This is the degree to which the administration assumes liability for its activities. There ought to be remedial measures for botches made.
  • All investors/proprietors ought to be dealt with similarly. This would likewise incorporate systems for change.
  • Reputation and notoriety hazard. The notoriety of the firm ought to be ensured however much as could reasonably be expected.
  • Ethical direct.

This study will review whether these standards have been connected in the administration of chosen extensive Rwandan organizations or whether they are relevant in any case, in addition to the method of reasoning, and how they can be changed in accordance with fit in with the particular set of Rwanda, keeping in mind the end goal to build up a structure for best practice.

Critique of Previous Research

The preceding sections have assessed the writing on the parent and right area of corporate administration.  This area investigates the literature on corporate administration, particularly in Rwanda, and distinguishes the examination gaps.

In spite of the fact that there are many studies focused on the existing links between corporate administration practices of board initiative structure, councils, arrangement, organizational, revealing methods, and an association’s implementation, only a handful of them have put attention on those issues more so in creating nations, mainly in states stumbling upon special situations, for instance, that found in Rwanda (Nzafashwanyo, 2016a; OECD, 2003; Solomon, 2010).

Corporate administration in Rwanda is unarguably still in the development stage when compared with the first world nations (Mwika, 2012).  In addition, there is little literature regarding the corporate administration in the country. There are numerous previous studies carried out on corporate administration practices in Rwanda. In fact, currently, the central investigation being undertakenby the Rwanda development board in Rwanda is on corporate administration practices.  The linking between board initiative structures, advisory groups,and departmental reporting procedures is hardly described nor dissected in actual writing(Kayitesi, 2013; Mwika, 2012).  This study will fill the gap by assessing the corporate administration practices carried out by companies in Rwanda.

The investigations in Africa and particularly East Africa and Rwanda on corporate administration have had a tendency to be general.  Williamson (2010) does an investigation of the determinants of corporate administration in Tanzania and prescribes best practice.  He, in any case, concentrates on open enterprises.  Mulili& Wong (2011) examines the corporate administration in Kenya.

Various investigations on corporate administration have been attempted in Uganda.  These have primarily centered around general practices, open enterprises, and money related foundations.  Wanyama (2006) investigations the viewpoints of different partners on corporate administration and responsibility in Uganda.  The partners considered included administrators, controllers, specialists, and organization executives.  He found that there is an absence of responsibility among Ugandan firms, and there was a general numbness about corporate administration among partners.  His investigation was excessively broad as examined corporate administration in Uganda overall, thus, may not precisely portray corporate administration practices in the private area.

Walabyeki (2008) likewise observes corporate administration in Uganda.  He, however, focuses on auditor independence.  He particularly finds that controls and oversight of the review work are not adequate to guarantee the favorable system for evaluator autonomy.  Matama (2008) inspects the connection between corporate administration and money related execution of chose business banks in Uganda utilizing a contextual investigation of four banks: two international and two indigenous.

Kayihura (2013) played out an investor versus partner contextual investigation of Rwanda and reasons that, notwithstanding globalization, corporate administration designsand that is on the grounds that business (yet additionally social practices) are not uniform.  He, nonetheless, leaves a gap in the research about on the acts of corporate administration in Rwanda.  Mwika (2012), in his exploration on if it’s indispensable to have corporate administration ciphers for institutional speculators and supermarkets, utilized Rwanda as his contextual analysis and presumes that corporate administration is advantageous when putting resources into developing markets and in organizations with great corporate administration, higher monetary returns, better execution, better development prospects, bring down getting costs, and higher esteem, when contrasted with the ones with little corporate administration that are thought of as high hazard ventures. Be that as it may, his examination is constrained to the codes and utilization of the systems by financial specialists. The critical discoveries of this examination demonstrated that board freedom, board composition, and institutional possession don’t affect budgetary execution, and he prescribed the national bank to give direction on the utilization of corporate administration rehearses that may changethe money related performance of business banks decidedly.

Given the insignificant research on corporate administration practices of Rwanda’s huge organizations, there are research gaps that have been distinguished and filled by this study.  It is normal that the methods created from this examination will be reasonable for the private part of Rwanda yet in addition in other comparative creating nations.


This section carried out a review of the literature in connection with practices of corporate governances in both emerging and developed nations.  Research demonstrates that the mission of most associations is to expand investor esteem in the here and now to the detriment of long-haul premiums, mainly where administration might be propelled to climb the official stepping stool through greatest pick up in the least time (Bruno &Claessens, 2010).  The writing additionally perceived that a structure that is proper to one association might not be appropriate for another.  Earlier research likewise announced great administration could help financial specialists to believe in organizations bringing about capital market execution.

Foreign exchange cost, financial metrics and organization speculations propose general components that are connected to the models of corporate administration.  These instruments are likewise talked about in the standards of corporate administration suggested by the OECD and the CACG.  In any case, the talk of the models of corporate administration demonstrates that the compelling use of these systems requires an arrangement with the perspective of the firm that wins in a given society and the conditions relating to that specific setting (Jo &Harjoto, 2011).  This implies with the end goal of this examination; these systems ought to be additionally talked about and evaluated in the matter of how, in connection with the viable corporate administration, they apply to the Rwandan circumstance.

This chapter additionally explored the speculations that are significant to corporate administration rehearses in this investigation.  This study will be utilized to outline the applied system to build up the essential theories in this research.

Chapter 3.  Research Methodology

In Chapter 2, a literature review concerned with the primary and immediate related disciplines was carried out.  This prompted the discovery of the gaps in the study, the development of issues related to the research, and the development of the research questions.  Chapter 3discusses the research methodology selected and how it was implemented.

Purpose of the Study

The researchexamined seven nominated large Rwandan corporates to comprehend their practices of corporate governance,the reason for their adoption, and how the improvement of corporate governance could be achieved by developing a suitable structure for corporate governance best practices for companies in Rwanda. More specifically, the study purposed toinvestigate and validate the suitability of the methodology to scrutinize the practices of corporate governance in large Rwandan corporates. Additionally, the research design, research questions, population and sampling strategy, research instrument, data collection procedures, data analysis, and summary are discussed.

Research Design

The design of the study refers to a rational order that links the experiential data to a study’sinitial research questions and, eventually, to its deductions (Yin, 1994).  According to Cooper and Schindler (2010) a study technique, which is a grand strategy or outline, summarizes the approaches and processes that are used to collect and analyze data.  The design of the study is a determining factor of the research’s aim (Amin, 2005).  As there were few prior studies regarding corporate governance in companies in Rwanda, this research focused on the characteristics of corporate governance in companies and how the nominated companies are administered.  It looked to investigate the different practices of corporate governance in the chosen organizations.  Additionally, it differentiated these practices to set up corporate governance standards, and broke down the explanations behind the present methods, keeping in mind the end goal to build up a system to play out the accepted procedures in the organizations of Rwanda.  It, along these lines, answered the questions, “Why?”, “What?”, and “How?” With a specific end goal to do this adequately, the research utilized the logic of triangulation and embraced a mix of the exploratory design and case study design.

Regarding the current study, the conceptual part was tended to by indicating the problem at hand.  The definition of the question for this study leaves space for an elucidation with respect to how to approach and address it: prescriptively or descriptively.  The latter approach prompts a portrayal of the determinants as seen from the practices in the current circumstance.  A prescriptive understanding infers giving a solution and contains a more regulating, or view-focused, response to the study query.

The administration of organizations in Rwanda has seen only a limited amount of studies, so it became pragmatic to investigate the practices of governance in the nominated organizations,  An investigative research is helpful in responding to the inquiries “How?” and “What?” and it empowers the disclosure of insights and ideas that give a superior comprehension of a circumstance (Patton, 1990).  Exploratory studies are reasonable where the study query can’t be replied by a simple “No” or “Yes,” however it requires some definite clarification (Perry, 1998). Thus, a qualitative approach was chosen for the current study.

As indicated by Panneerselvam (2004), exploratory investigations empower distinguishing proof of the notable elements and factors.  They are reasonable where very little inquiries have been madein order to increase knowledge in this area.  An exploratory examination is consequently appropriate for the investigation of corporate administration in organizations in Rwanda, where very little research has been attempted on administration practices of organizations.

Besides, the relevance of the general standards of corporate governance on the organizations in Rwanda particularly has not been considered.  This requires an outline that will empower the ‘one of a kind’ setting of Rwanda to be understood.  In that capacity, the research embraces a case study approach.  This is on the grounds that the case study design empowers the examination and investigation of compound occurrences within their settings utilizing an assortment of information bases (Baxter & Jack, 2008).

Melyoki (2005) contended that, because of the restricted condition of learning on Africa corporate governance, the design of contextual analysis is the most suitable, as it empowers corporate governance to be contemplated in its particular setting with a specific end goal to build up the degree to which acclaimed models and standards are relevant.  Consequently, the research on practices of corporate governance of specific cases will help bring out the importance of corporate governance in organizations in the Rwandan setting.  The case study design has been bolstered by the little research that has investigated the East African practices of corporate governance.  This is on the basis that the design of contextual analysis is the most reasonable in developing nations because of the restricted condition of learning (Matama, 2008; Melyoki, 2005; Mulili, 2011).

As per Mackey and Gass (2015), questions such as why and how are probably going to support the utilization of histories, analyses, or contextual investigations.  Be that as it may, in circumstances where the phenomenon must be examined, at that point the traditional design is the fitting one.  On the off chance that it is contemporary and the researcher has control over it, the best approach is that of experimental design.  Nonetheless, where it is contemporary,and the researcher has no influence over the occasion, at that point the best approach is the case study design.  Corporate administration in organizations is a contemporary circumstance,but the researcher has no influence over it. Thus the design of the case study approach was the best fitting.  A case study is characterized as an experimental inquest that examines a phenomenon that is contemporary, mainly when the limits between the setting and the phenomenon are not unmistakably apparent (Flick, 2015).  Both the characteristics of organizations and their practices of corporate governance are essential in this examination, requiring a contextual analysis.

One of the main issues to decide on when utilizing a case study approach is a choice between a single and various contextual investigations.  As indicated by Panneerselvam (2004), one approach ought to be utilized when represents the dire case in testing a very much specific hypothesis.  The case ought to be unique, extraordinary, or dramatic.  This is to say, the researcher in this situation will have the capacity to study a phenomenon not previouslyaccessible.  Yet, in all different cases, much contextual analysis ought to be embraced.  The currentstudy met none of the conditions of a singlecase. Thus various contextual analysis approaches were embraced.

The research was embedded because it had more than one analysis unit.  Numerous cases also empower the study of similarities and differences between and within the cases, therefore resulting in more robust discoveries.  Besides, according to Nair and Riege (1995), the evidence from various contextual investigations is usually additionally convincing.

Although according to Mulili (2011), there is no consensus with regards to a number of cases that is satisfactory, researchers, for the most part, prescribe at least two cases and at most fifteen cases.  Eisenhardt (1989a) suggested that more cases ought to be included until a saturation/redundancyis acquired.  In order for redundancy of data or saturation of sample to happen, either the themes will repeat, or new themeswill no longer emerge.

As per Mulili (2011), while Nair and Riege (1995) discovered steadiness to happen after just six interviews, Woodward (1996) realized that it occurs after five.  Eisenhardt (1989a) prompted that a number between four and ten cases frequently functions admirably, in light of the fact that, with under four cases, it is regularly hard to create hypothesis with much complexity, and its experimental finding is probably going to be unconvincing.  Then again, more than 15 cases would be unmanageable (Miles & Huberman, 1994).  In this previous research’s perspective, seven cases were contemplated, because it was within the prescribed range.

Eisenhardt (1989a) emphasized that the cases ought to be chosen purposefully. According to Yin (1994), every case must be painstakingly chosen,so it either forecasts comparable outcomes (an exacting replication) or differentiating outcomes however for unsurprising reasons (a hypothetical replication).

Research Questions

For research to remain focused, use of correct research questions is essential, as research can be complicated (Punch, 2005).  For this research, seven questions have been established on the basis of the reviewed literature.  These are:

R1. What is the role of the shareholders in governing the company?

R2.  How are the boards of companies constituted?

R3.  How are the boards set up, how do they function, and how are they held accountable?

R4.  What do corporate governance challengeslarge Rwandan companies encounter?

R5.  Which board of directors’ culture prevails in large Rwandan companies?

R6.  How effective is corporate governance today and which factors determine this effectiveness?

R7.  What should pertinent concerns be addressed for the additional improvement of corporate governance in Rwanda?

Population and Sampling Strategy

Crouch and McKenzie (2006) argue that research basedon interviews comprising few respondents is trending in social sciences.  In the current case study, based on the data collected from the Rwanda Revenue Authority, the population used was 87 companies, the target sample of participants was 7.  Creswell (2007) recommended studying 3 to 10 subjects whereas Quinlan (2011) asserted “phenomenological researchers often work at great depth with a relatively small number of research participants” (p. 310).

The sample for the current study consisted of seven CEOs of large Rwandan companies.  Participants represented different companies, cultures, and countries of origin.  Among the seven participants, only one was female.

As such, with a goal to listen to several individuals’ experiences, the current research employed three strategies for sampling: (1) focused sampling strategy, meaning that the analyst picks sites and individuals for research which can directly inform information and understanding toward the study problem and focal phenomenon in the research (Creswell, 2007); (2) criterion sampling method, which best works when all the individuals involved in the study are representative of people who have had experience with the occurrenc (Creswell, 2007); and (3) snowballing, wherein participants interact with other participants by giving referrals to those individuals meeting the study’s inclusion standards.

The researcher identified three key characteristics for each participant to commonly have in order to take part in this research.  The criteria for inclusion were: (a) the participant must be a leader executive, (b) the participant must have extensive involvement in corporate governance, and (c) the participant must represent asizeable Rwandan company.

All research participants were persons holding a CEO position.  The duration of experience in corporate leadership positions ranged from ten to thirty years.  In total, this study benefited from more than 100 years of experience in corporate governance.  A brief description of the background information for each participant is presented in Table 2

For purposes of confidentiality, all data that could possibly identify the participants was encoded.  The individuals have been branded as A, B, C, D, E, F, and G. Companies that were represented, were identified by numbers 1, 2, 3, 4, and 5.  The research population was the corporate governance executives of the seven nominated companies.

The population sample ought to be to the redundancy point (Patton, 1990).  Neuman and Robson (2012) clarified repetition/immersion to allude to the point that permits the recognizable proof of a predictable example—as it were, what number of people are sufficient to create adequate information about the Rwandan organizations’ governance?  The other thought is the sample size required to accommodate the variety within the population targeted, which for this situation is the corporate administration players (Flick, 2015).

The study participantswere selected purposively from the different corporate administration partners utilizing the most extreme variety strategy.  Patton (1990) advised that preferably in subjectiveresearch,  begin with the least sample, instead of deciding the sample estimate hesitantly from the beginning.  In perspective of the standard of most extreme variety, the scope of the nominated organizations might be considered.

Observe that the sample estimate was thusly chosen, not as a population percentage, since the objective is not the representativeness, but rather the number of corporate administration officials that are data rich with a specific end goal to give satisfactory information (Taylor, Bogdan, &DeVault, 2015).

Sampling technique and procedures.  A resolute sampling technique was used for

nominating the contributors to the research. Contrary to the quantitative researches which use arbitrary sampling, the participants were selected through qualitative study using either purposeful or convenience sampling techniques.  (Amin, 2005; Baxter & Jack, 2008;Yin, 1994). On the contrary, qualitative studies rely on the lucidity and control of purposive selection.  This type of sampling depends on selecting cases that are data-rich which allow for in-depth research.  Rather than being founded on incidence, generalization is theoretical in which ideas are able to be inferred from the discoveries to be useful to a bigger populace.  (Mackey & Gass, 2015).

Fulfilling a specific purpose that relates to the research questions, purposive sampling is participant selection based on an indistinct foundation.  (Collingridge& Gantt, 2008). Instead, being founded on representativeness, sampling is based on occurrence in qualitative research, and explicitly case studies (Yin, 1994).  Purposeful sampling’s logic and control reside in choosing cases that are data-rich for in-depth studying (Patton, 1990).  The data-rich cases which he describes are cases which an individual can obtain knowledge about issues of local significance, pertaining to the purpose of the study, hence the phrase “purposeful sampling.”

Collingridge& Gantt (2008) have identified a number of purposive sampling methods.  In order to gain from the plusses of triangulation, this study will usea few of these sampling methods to decide on the particular participants, which will be required to be sampled from the research population.  Snowball method, a typical case, and maximum variation will be included in the sampling methods.

The maximum variation sampling method uses an extensive range of disparity on scopes of interest selected in order in order to reveal core elements, essential themes, and/or communal magnitudes cutting across a diverse sample while simultaneously proposing the chance to document exclusive or varied differences.  (Nasti, n.d.; Patton, 1990).  Using the maximum variation sampling method, the researcher selects the extensive range of corporate governance backer assemblies from the carefully chosen cases, such as religious leaders, members/contributors, management, and the board.

As per Neuman and Robson (2012), the individual case is embraced when a researcher desires to choose a characteristic profile.  Because it is mainly qualitative research, it is important to collect both a data-rich contributor and a typical individual who is accountable for a characteristic.  As a result, the individual typically in charge of corporate governance in the numerous clusters will be selected, which, in this case, is the Chief Executive Officer to represent management, the chairman of the board to represent the board, an acknowledged agent of the primary funders/partners, and the religious leader/patron.  Since they are typically conscious of the company’s governance, these individuals were chosen for the case study.

The researcher then employed the acknowledged corporate governance players to direct to additional individuals involved in corporate governance.  In this instance, there could be a different person or an extra data-rich individual.  In addition, purposeful arbitrary sampling, an arbitrarily selected sample, was also used to decide the recipients to take part in the study.

Research Instrument

In qualitative studies and researches, the researcher is the chief instrument who needs the following learned skills, among others: talking to people, taking notes, and observing. “The biggest problem faced by the novices is when we prepare for the ethnographic fieldwork and when the course books are not explaining enough concerning what to check, how to check and what to jot down” (Delamont, 2004, p. 672).  The same idea is conducted in the interviews.  A naturally good interviewer is not created by talking in everyday life, listening, asking questions, and communicating.  Consistent with Helfferich (2009), the subsequent expertise is needed for a good interviewer: capabilities in communication concept, technical capability, attention and navigation, collaborative capability, and familiarity in dealing with individual’s prejudgment.

As per Creswell  (2005), the researcher is the instrument in semi-structured and unstructured qualitative interviews, and a unique researcher has the potential to influence and collect the  empirical materials. The data collection methods used by the researcher were in-depth interviews, observations, and documentary action research review.The researcher observed the ethical principles of research while undertaking this research.

As the research instrument, particularly one who does not regularly utilize a qualitative methodology, it was quite challenging to identify a significant theme. Some of the challenging and perplexing tasks in this research were framing a suitable study question and mounting a comprehensive study strategy.  The researcher is also responsible for limiting any individual prejudices.  For example, the researcher did not desire to impact any of the contributors by forcing replies that were expected from given individual based on that individual’s personality.  Promoting impartiality in the research was the researcher’s responsibility.

In a bid to make clear the researcher’s thoughts and preferences, he incorporated a dialogue on his individual opinions connected to the subject matter.  This included his interest and worked in the corporate governance arena ultimately motivated his contribution.  To be specific, having served as a middle manager for several years and as a chief executive officer for over a decade in commercial Rwanda, the researcher had specific concern towards the subject matter.

Progressively, he felt that his involvement stemmed from three capacities: (a) individual experience, (b) educational experience, and (c) individual character type.  As a corporate leader, the researcher felt strong and confident about the role corporate governance has played in his life and he certainly believes that good corporate governance practices are a solution to growing Rwanda’s private sector.  However, he knew that companies experience diverse challenges during the procedure, predominantly startups, and the sense of growth can simply be crushed by the frustration levels.

To guarantee that the interviews produced data aligning with the goals of the research, the conducted research followed a uniform procedure:

  1. The participants were invited via phone call,and emails were sent describing the study and informing them of the risks involved. Obtaining participants’ written permission to be studied is imperative before gaining any information from participants (Creswell, 2007, p. 125). In order to avoid any confusion or misunderstanding, the researcher sent participants an e-mail with specific elements such as “(a) the right of those taking part to leave the study at any time willingly; (b) the fundamental objective of the study and the steps to be used in data collection; (c) comments about safeguarding the confidentiality of the respondents; (d) a statement about known threats associated with the participation in the study; and (e) the signature of the participant” (Creswell, 2007,p. 123).
  2. The researcher held exhaustive (semi-structured) interviews with contributors in diverse localities.
  3. The researcher audio-documented and transliterated interviews within two days of conducting the interviews.
  4. The researcher-initiatedinformal follow-up contact and gave each participant his/her individual transcript for member-scrutiny to confirm the content of the transcript.
  5. The researcher reviewed the data at the companylevel.
  6. The researcher encoded the information for developing themes and document the audit trail to safeguard verifiable study steps all through the procedure.

Establishing rapport with the respondents so they could share their beliefs and experiences is very important (Creswell, 2007, p. 127). During the process, the research and participants were able to establish a relationship that ensured mutual trust.

Although it proved difficult in circumstances where the researcher’s opinions opposed the participant’s, the researcher was well aware of his thoughts and remained non-judgmental, accepting the participant’s views. This is an essential aspect of interviewing.  The researcher attempted to exercise alertness to both spoken and unspoken communication and was flexible in saying things differently and following particular approaches to questioning and ensuring the use of phrases that were indistinct and significant to the respondent.  The researcher must be capable of askingreasonable questions for the participant.  Most importantly, the researcher had to be a good listener.

The most undoubtedly common method of recording interview data is the digital recorder, having the apparent benefit of preserving the whole spoken part of the interview for future scrutiny.  While certain respondents may exhibit nervousness while talking during the recording, their uneasiness typically fades after a short time.  Fortunately, there were no drawbacks with a recording as the equipment functioned well during and after the interviews.  At times during the interviews, the researcher interrupted the interview to ensure that the recorder was recording well enough by playing back what we had just discussed to ensure that that data was captured correctly.

Amongst the discussions, the focus levels by participants on the dangerous occurrence, as opposed to the broader range of their use, was diverse. This was, however, seen as natural, developing component of the discussions, and sequel queries were used to warrant adequate information was revealed on the occurrences.  In the instrument, prompts, and follow-ups, the included questions are from a precedent interview conducted by Kvale and Brinkmann’s (2009, pp. 130–140), advice that covered such items as:

  • make known themes prior to inquiring questions that are comprehensive;
  • concentrating on explanations of whatoccurred and how through incidents that are critical, as an alternative to why it occurred (for a start);
  • appropriately following up on replies;
  • looking for interviewees’ sentiments projection or others’ sentiments in their information and communal domains; and
  • examining the researcher’s understanding of previous interview replies and findings.

Data Collection Procedures

By giving valuable data for comprehending the procedures behind experimental consequences and assessing the variations in people’s insights, data collection demonstrates importance in impact assessment.  As a significant feature of any research, data collection can impact results.  For example, inaccurate data can lead to invalid and meaningless results.  To obtain accurate data, the researcher should record any possibly valuable information methodically, precisely, and thoroughly using photographs, auto tapes, field notes, and other suitable resources.

Data collection methods in qualitative research like this one involved direct, personal interaction with individuals.  Since it was time intensive, the information was gathered from a lesser than a typical case of quantitative study.  Although it was smaller research, the study contained a more vibrant, more profound insight into the subject matter of Corporate Governance in Rwanda.

Techniques of triangulation used in this study were observation, documentation research and in-depth interviews to investigate the research questions.  Triangulation addressed the validity of the data collected.  The data obtained through the interviewees and the observations were triangulated by examining documents such as Annual Reports, Company Magazines, Filed Board Minutes, the Rwandan Company Law, andthe board charters of the companies that described how boards were to be established. Using several information collection techniques, an approval of dependability and legitimacy was established when the information was compared from different bases, as they were comparable and consistent.  In order to support the data obtained, the sources were triangulated, aligning the data to highlight where one does not match the other. The areas of concern which were reviewed and questioned were provided with valid reasons and actions precisely, improving the accuracy of the assessment. Theory triangulation provided new insights from multiple theoretical perspectives.

Data Analysis

To address the research questions, data analysis is a procedure of inspecting, classifying, tabulating, and amassing experiential evidence (Miles & Huberman, 1994).  General guidelines exist to help in the analysis of qualitative data, not rigid rules or formulas (Patton, 1990; Yin, 2009).

The analysis of qualitative data has a focus on data, mainly depending on the researcher’s flair and interpretative capability (Yin, 2009).  As stated by Amin (2005), research that is qualitative has a researcher who looks for patterns of information in the arrangement of recurring behaviors or events and then interprets the patterns while moving from portrayal of experiential information to meanings interpretation.  To have a solid conclusion, useful data analysis must have conceptualized, documented, categorized, coded, and inspected associations (Miles & Huberman, 1994; Patton, 1990; Yin, 2009).

With the data first being documented, the data was organized and arranged for analysis by the interviews being transcribed (Amin, 2005).  Therefore, the information from observation and interviews were first transcribed and then conceptualized through the expansion into sub-themes.  Yin (2009) advised the procedure should shadow the study queries.  Then the data was coded and based on the given responses, instead of basing the data off a prior determined coding in order to avoid prejudice.

Through pattern matching, the coded replies from the interviews were classified, and the associations were examined.  Yin (2009) states that similar design is the examination of classified information to detect resemblances and variances so as to conclude associations as per the study queries.  Subsequently, deductions and proposals were prepared.

First, the analysis was performed on an individual case basis followed by a report.  To cross-check for accuracy, the researcher gave the draft report to the interviewed CEOs.  Yin (1994) proposed that the usage of a crucial informant to validate the correctness of an incident report removes any imprecise prejudices the analyst could have had.  Henceforth, a cross-case examination was done in the classifications and, subsequently,a comprehensive cross-case examination.

This research included an analysis of data in establishing a case narrative for the corporations nominated.  For all the companies, the research also included a cross-case analysis.  In addition, the information was exposed to content examination.

Case description.  For each company, an individual report was prepared by means of

data that was acquired from the interviews and reviewed documents.  The case study’s major strong point is its capacity to provide a chance to include numerous evidence sources (Yin, 2009).  Identifying any incongruences, the researcher searched for differences amongst the numerous interviews, their outcomes, and the outcomes of reviewed documents.  In response, the participants, before the final report preparation, were able to review the reports (drafts) acquired from the interviewees.

Cross-case analysis.  Having set a cross-case analysis of the entire group of companies

examined (Yin, 2009), the researcher kept in mind the purpose of this exercise of identifying the patterns that were common (Miles & Huberman, 1994; Stake, 2006).  Consistent with Patton (2002), description of the case must always go before the cross-case examination.  Likewise, Perry (1998b) recommended that the researcher briefly describe each caseprior to beginning the data analysis chapter.  Patton (2002) mentioned the definition of cross-case analysis as “growing together responses from different people to similar questions or analyzing different views on common issues” (p. 440).  Based on this information, this was an assessment of the responses of the various companies.

Content analysis.  The data gained using consultations was exposed to content

examination (Weber, 1990) in agreement with the processes recommended by Cavana, Delahaye, and Sekaran (2001).  The researcher encoded the information, meaning labels were assigned to words, paragraphs, or phrases, thus enabling the researcher to combine and differentiated information from the interview into classifications creating concepts, subjects, or ideas (Carson,Gilmore, Perry, &Gronhaug, 2001).  The analyst made use of direct interview quotes to “validate deductions about variances amongst cases in the cross-case examination” (Perry, 2001, p. 316).

For the coding, recording, pattern matching, and analysis of data, the NVIVO Text Analysis software was used.  A test analysis tool, the NVIVO is useful for evaluating, interpreting, and explaining social phenomena, and additionally analyzing data such as documents and interviews.  By quickly recognizing the patterns, NVIVO does replace the researcher during data analysis but directly aids in consolidating the information in an intelligible manner to enable an operational examination (Yin, 2009).  Based on this research, NVIVO will be immensely helpful during the data analysis.

The comprehensive data analysis, presented in the fourth chapter of this study, comprises recurrent quotes from the interviews.

Data Analysis Method Description

Based mostly on the review of literature introduced in the second chapter, the researcher designed seven research questions as expatiated in the current chapter.  Given that the study utilized qualitative research methods, the data analysis was categorized to come up with an emerging theory by dealing with the problems brought up in it.  Earlier in this chapter, it was discussed that the data was gathered by means of semi-structured interviews, document reviews, and observation.  Each interview lasted for an average of 40 minutes, was recorded, and,in order to improve coding, was transcribed verbatim.  Furthermore, throughout the interviews, brief notes were taken.  The data dependability was improved through the use of a research assistant during the coding and interviews.

Coding.  In accordance to Zikmund (2013, coding is explained as a means of attaching a

character symbol or numerical score to each reply, and it is carried out for classification and identification requirements.  After collection of the statistics, with the facilitation of the research assistant, statistical analysis for this research was initiated.  The research assistant and the researcher used a three-stage coding procedure: open, axial, and selectivecoding was sequentially done.  As a result, the emerging themes were recognized.  Every one of the three stages is explained briefly.

Open coding.  Open coding is described as a procedure involving initial codes

assignment so as to shrink a big data mass into analytic groups (Neuman, 2010).  Likewise, Glaser (1978), Strauss and Corbin (2008) andMertens (2009 took into consideration open coding as the procedure of dividing information into distinct portions, carefully evaluating it, inspecting it for differences and similarities, also making inquiries on the research phenomena.  Basically, we allocated a symbol or label to each distinct idea, event developing an incident from each observation, paragraph or sentence.

Axial coding.  After open coding, we had to arrange the original codes, connecting the

codes, and finding major investigative groups (Neuman, 2010).  Axial coding, in accordance to Mertens (2009), involves putting back portions of the information discovered and separate by an open coding means, and the purpose is to determine any relations involving the information groups.  According to Strauss and Corbin (2008), this type of coding helps a research investigator to create main trends out of interrelated or overlapping open codes that indicate a reliable indication for the primary codes.

Selective coding. refers to the final stage of data analysis to be completed after core concepts emerging from the coded data categories and subcategories have been identified through open and/or axial coding.The essential idea is to develop a single storyline around which all everything else is draped.(Neuman, 2010).

Limitations of the study

Unique in its own capabilities and strong points (Yin, 2009), the case study research, according to Perry (1998b), is “rigorous, coherent, and based upon perfectly justifiable philosophical positions”In addition, Zikmund (2013 stressed that the case study techniquesdeliver a better understanding of the data..  As stated by Creswell (2003), the researcher has no control of limitations, which are the weaknesses of the research.  Due to the limited resources within a doctorate dissertation, this study could not address all of the issues related to corporate governance practices of large Rwandan companies.

In reflecting on the outcomes of this research, a limitation of the study is the small population and sample size.  The current  research was limited to the real experiences of seven participants, and as such, this research’s results cannot be generalized for all people working in corporate Rwanda.  Furthermore, this study is limited because it did not represent all sectors, especially Small and Medium Enterprises (SME).  Additionally, despite the participants seeming relaxed with sharing their experiences with the researcher, it is mortal nature to overlook uttering instances of their experiences that could have been worthwhile for this study.  Lastly, since the sample used in this research consisted of senior executives with extremely demanding schedules and limited availability, this may have influenced the breadth of information provided.

Henceforth, in regard to the study of this subject, further research with a more diverse population would add significantly to understanding the practices related to corporate governance in Rwandan companies.  More research with a larger sample, better gender balance, and a selection of more SMEs (and differentiating them) would be excitingareas of future research.


Having defined the approach embraced for this study, this chapter covered the researcher’s explanation and justification of the research model embraced by this qualitative study.The researcher further clarified the techniques used in data collection, instruments, and case selection criteria.  The detailed descriptions provided by seven participants in this study clarify the corporate governance practices of corporations in Rwanda.  Having examined the above, this chapter additionally covered the researcher’s identification of the limitations of the case study approach and examined thelimitations were to this study.  Lastly, the chapter presented the processes of data analysis and addressed ethical issues.

Chapter 4: Data Analysis

Chapter 3 explained the research methodology utilized in gathering and analyzing data for this research.  The qualitative research with the use of a case study methodology was considered as the most effective for dealing with the study problem in this study since the research on the case study depends on several information sources and has a substantial evocative potential (Yin, 2009).  The aim of this chapter is to accomplish two objectives.  First, to study the patterns and themes in the data obtained by means of interviews, document reviews and observations.  Second, to associate the themes and patterns emerging from the obtained data to the research theory of this paper.

This data analysis chapter is divided into 5 segments: an overview of the chapter, report of the participants, data analysis techniques, a data analysis with respect to the study problems and the summary of the entire chapter.

The Respondents’ profiles

Research problem for this study included examining the corporate governance procedures implemented by large, Rwandan organizations.  To deal with this problem, the researcher gathered data from seven interviewees who were CEOs of chosen companies. Data was gathered by making use of semi-structured interviews and document reviews with each interview.  Each individual interview lasted an average of 45 minutes at various, convenient places.  This section analyzes the data acquired from the seven case companies.

Table 2

Profile of the respondents

Company code Interviewee’s code Gender Interview Date Time of Interview Position Length of service as CEO
A A1 Female 11-05-2017 10.00am-11.00am CEO 5 Years
B B1 Male 13-05-2017 09.00-10.00am CEO 12 years
C C1 Male 13-05-2017 16.30-17.15hrs CEO 27 years
D D1 Male 18-05-2017 18.00-18.45hrs CEO 32 years
E E1 Male 19-05-2017 10.00-10.50am CEO 11 years
F F1 Male 20-05-2017 10.00-10.50am CEO 14 years
G G1 Male 20-05-2017 16.30-17.15hrs CEO 7 years

Source: created for this study.

Table2 signifies that for every seven CEOs questioned, only one was a female.  This is a representation that CEO roles of big Rwandan organizations were filled by more males than females.  Nevertheless, given the Rwanda Constitution and specifications for at least 30% gender representation, lately, many women have been heading up the ladder and showing themselves to be as superior as or even better than their male counterparts.  Table 2, furthermore, signifies that most of the respondents had filled their positions for a period of five years.  Five of the CEOs have functioned as CEO for over 10 years.

Research Questions Data Analysis

This section is made up of data analysis with respect to the seven study queries created for this research.Below are themes and sub-themes from the data collected from the respondents and analyzed.

Theme 1: Important role of shareholders

On questioning the CEOs about the extent to which shareholders performed their roles in overseeing the organizations they invested in, and the extent to which they valued their functions in the governance of the organizations, the following specific themes were derived: Board oversight and sourcing funds.

Sub-theme1a: Insufficient Board Oversight

The CEOs’ had this to say on the sufficiency of board oversight:

  • ‘Supervising and appointing the board,was one of the crucial functions of the shareholders, boards are then mandated as stewards of the company’ (B1).
  • ‘Our board, given the close supervision of their activities by the central bank, their oversight by shareholders is sufficient’ (A1)
  • ‘In the absence of oversight by the shareholders, boards wouldn’t focus on the shareholder as the main stakeholder’ (B1)
  • ‘Board evaluation by the shareholders as a requirement for listed companies enables the shareholders to hold accountable the board and hence sufficient’ (A1)
  • ‘Rwanda company Law requires the board and management to report to the shareholders at least twice a year; this accountability enforces board oversight by the shareholders’ (D1)
  • ‘Family businesses consider boards as a regulatory requirement and hence insufficient oversight (E1)

Sub-theme 1b: Adequate Sourcing of Funds

This is what the respondents had to say regarding the above sub-theme:

  • ‘Adequate Sourcing offunds is the straightforward responsibility of shareholders as they play an important role in providing the needed capital of a company’ (C1)
  • ‘Management of the company resources as a major stakeholder role but funding was only important in the initial stages’ (F1).
  • ‘Funding isn’t a key issue given that listed companies raise the funding from the market and not shareholders’ (A1)
  • ‘As a family business, there is a continuous close relationship between the shareholders, board, and management as they continuously needed capitalization’ (E1).
  • ‘Financing is the main challenge facing the company,and the shareholders need to reinvest’ (E1)
  • ‘As a public company, on approval by the board and the shareholders, we can issue new shares to raise capital from the market, this has facilitated our growth’(A1)
  • ‘Given our continuous capital needs, we always have to call on the shareholders,and this creates a close operational relationship with the shareholder which can be problematic’(F1)

The information presented by the interviewees was validated with a review of the shareholder annual meetings reports, annual reports, and legal provisions such as the Rwanda Company’s Act, which recognized the major functions of stakeholders as follows: to register for stock shares and provide capital to the company, to designate the appropriate people as directors, to eliminate those directors they do not need, and to make sure that the information they get is properly put together. This information as part of our methodological triangulation drew the same conclusions hence validated was established.

Theme 2: Constitution of Boards

Addressing the second research problem required a review of how large companies’ boards were organized based onthe following sub-themes: Stakeholder representationand  Boardcomposition

Sub-Theme 2a:Inadequate Stakeholder Representation

CEOs’ had several views on the adequacy of stakeholder representation on their boards, here is what they had to say:

  • ‘Our board is founded in such a way as to symbolize various stakeholder interests as agreed before in the shareholder’s contract’ (F1, G1)
  • ‘Given the diversity of our investors, investors are well represented on the board, and a few places are provided for to cater for other stakeholders’ (E1)

This aligns with the investor concept, which maintains that companies are in existence to the advantage of several partners and the agency theory in the literature review. The scope of corporate governance has broadened to consider all stakeholders (Letza 2004), so it seemed necessary to look into whether the effect of board effectiveness also extendedto and guaranteed the protection of all stakeholder interests.

Sub-theme 2b: Board Composition

The composition of the boards of the companies interviewed was different, and the CEOs’ had this to say:

  • ‘Our board is composed of five board members, all representing the main shareholder’ (E1)
  • ‘As required of the banking regulation, our board is composed of seven board members, 2 representing the main shareholders and five are independent directors’ (A1)
  • ‘Our board is composed of five directors plus the CEO; the Chairman is the largest shareholder, the rest of the board members are appointed by the largest shareholder’ (F1)
  • ‘Our board given the basis of appointmenttends to lack specific skills, like strategic management’ (D1, E1)
  • ‘The development of the boardis still a big challenge for our company’ (B1)
  • ‘Though the shareholder agreement stipulates that the Chair will be appointed among the directors by the directors, the board chair was appointed by the main shareholder’ (E1, G1)
  • ‘The board chairperson is appointed by the Republic of Rwanda’s president as constitution requirement’ (F1)
  • ‘Once constituted, board directors have three-year renewable mandates’ (A1, D1, E1)
  • ‘There is no limitation on the period a director can serve on the board’ (B1, C1)
  • ‘As a requirement of the central bank, directors can only serve for a maximum of nine years on the board’(A1)
  • ‘Given the limited capacity of board members especially from the private sector and given the governance capacity within the civil servants, the government should in the short term be versatile enough to allow its civil servants serve on private company boards to develop the ability of the boards’ (B1)
  • ‘In the short term, companies should think about recruitment of board members beyond the boundaries of Rwanda to maximize the sample area of capable local directors’ (D1)

Tsui and Gul (2000) believed that the quality of the directors was more important than the quantity for effective corporate governance. The quality of directors will lead to the quality of decision as well asto fewer arguments on the board, which would speed up decision making.

The constitutions of organization boards were carried out in such a way as to protect the interests of the investors and include external and internal investors. Some of the interviewees recommended adjustments that could make the board constitution much better and higherfunctioning. More cohesive boards are likely to perform better,and this might be achieved on a small board.

Theme 3: Adequacy of the Board Establishment, Operation, and Accountability

This subsection examines the following sub-themes: board establishment, board performance and effectiveness, management control, strategy oversight, board evaluation, and stakeholder engagement.

Sub-theme 3a: Board Establishment

Boards were organized in such a way as to signify the likes and dislikes of various stakeholders, such as government.  This strategy, based on the stakeholder principle mentioned in Chapter 2, decreased the level of change resistance, reduced conflict chances, and guaranteed the better functionality of the companies.The following quotes from the interviewees illustrate sub-theme3a:

  • ‘Our board is composed of both independent and executive directors, which enables a diversity of views in the board’ (A1)
  • ‘The board has historically been composed by directors representing all shareholders’ (C1)
  • ‘The board of our company is representative of most stakeholders especially government, shareholders and clients’ (D1)
  • ‘The structure of our board is largely determined by the bank corporate governance regulation of the central bank, and it ensures a good mix of independent and executive directors of the board’ (E1)
  • ‘As a family business, the board is mainly family members and a few close friends’ (F1)
  • ‘Our board is constituted by representatives of the shareholders with shares above 20%, one seat for the minority shareholders on a rotational basis plus two seats for independent directors’ (F1)

Induction of new board members was done by some.The following quotes confirm the sub-theme 3a of board establishment, specifically on induction:

  • ‘Our board charter requires that induction is done for all new board members by executive management and the board’ (A1)
  • ‘As a requirement of the board, whenever a new board member is appointed, the company secretary ensures an induction is done before the next board meeting’ (D1)
  • ‘I personally ensure an induction is done for all new board members and we have a clear induction program’ (E1)
  • ‘When a new board member is appointed we share key information with them, organize an informal meeting with the company secretary and myself to explain further about the company and the expectations of the board’ (F1)
  • ‘The Chairman of the board takes it upon himself to induct new board members, and I am invited in the sessions to share more technical information, these inductions rejuvenated their minds and presented a better understanding of the performance of the business and what was anticipated of them.’ (G1)

Sub-theme 3b: Performance and Effectiveness of the Board

With regards to the performance and effectiveness of the Board, the CEOs’ had several views. Here are their quotes:

  • ‘Board meetings were held every quarter’ This presented a decent chance for board members to plan on issues influencing their companies (A1)
  • ‘As required by the governance regulations, board committees and the board meets at least every quarter’ (D1)
  • ‘Management groups kept board members well informed of any significant company activities, and the board met twice a year’ (E1)
  • ‘Board meetings were organized when important issues occurred, such as increasing capital and removal of assets’ (G1)

Interviewee A1 and D1 had the following views on board subcommittees:

  • ‘Our board functions through subcommittees, the main sub-committees are risk management and governance, audit, executive board’ (A1)
  • ‘We have ad hoc committees of the board to deal with the patient problems at hand. Sub-committees are not decision-making organs of the companies; they plan and suggest to the full board for final selection with the exception of where the board clearly delegates the obligation to the sub-committee’ (D1)

Sub-theme3c: Management Control

The interviewees acknowledged the respective management control systems in place. Here are their quotes:

  • ‘We have over time introduced in the past years internal and external audit functions, reporting to the audit committee of the board’ (A1)
  • ‘We have an internal audit function reporting to the board, and we outsource the external audit function to the big 4 audit firms’ (D1)
  • ‘We have no internal audit function, and we undertake external audits once a year’ (B1, C1).
  • ‘The board receive a quarterly financial statement, management letter and then yearly statements at the ending of the year’ (E1)
  • ‘The board is objective when engaging with external and internal auditors’(G1).
  • ‘Impartiality was required to make sure honesty in the companies’ (F1)
  • ‘Efficiency, financial, and operations matters were revealed to the stakeholders on a bi-annual basis’ (B1)
  • ‘As expected by the banking law, banks publish in the local newspapers their overall performance’ (D1)
  • ‘The board also reports to investors in the investors annual meeting’ (A1, D1, E1)
  • ‘The actuality of flawless reporting options also improved governance’ (C1)
  • ‘The board, also reports to the Minister for Infrastructure’ (F1)
  • ‘The board also accounts to the Ministry of Finance and Economic Planning’ (G1).
  • ‘These reporting options were tools of responsibility that placed responsibilities on board directors to value the board charters and code of honor by performing ethically and responsibly. Great governance of corporates involves executives to be responsible and ethical in their actions’ (D1)
  • ‘Boards established administration teams that were responsible for operating the organizations on a daily basis as management associates’ (A1, D1, E1, G1)
  • ‘Staff were chosen mainly only on the merit of their proficiency’ (B1)
  • ‘The administration teams are headed by chief executive officers, each of whom, was designated by the boards “as the main executive, to manage it on a daily basis.”’(A1)
  • ‘Management team members generally met on every week basis’ (C1)
  • ‘The average size of the administration executive groups was between five and nine members’ (F1)
  • ‘New administration team members as expected by internal processes were subjected to a minimum of two weeks’ induction, with a three to six months’ probation period during which comprehensive training was presented’ (E1)

Sub-theme 3d: Strategic Oversight

The interviewees had this to say about strategic oversight in their companies:

  • ‘Strategic planning and acceptance of the strategic plans with frequent updates was a major duty of the board, providing that the organizations had a clear plan carefully guided by the strategic plan and it transcended to all sectors’ (A1)
  • ‘Accountability starts with the board and then each individual and every staff member’ (G1)
  • ‘The management team, members of the panel, and the workforce authorized performance agreements that were utilized to examine their overall performance’ (E1)

Sub-theme 3e: Board Evaluation

When interviewed on the processes and regularity of board evaluation, the interviewees had this to say:

  • ‘Our company has an assessment system for executive directors independent of how they carry out the business of the board’ (B1)
  • ‘We have no board evaluation, and we recommend that board evaluation, especially performance of non-executive board members, should be done’ (D1)
  • ‘We have no board evaluation, and board members aren’t accountable’ (F1)
  • ‘Communication among directors could be improved when they are involved in doing the board assessment’ (A1)
  • ‘Board evaluation addresses the shortcomings of each directoras they can be shown on the assessment and directors can be encouraged to enhance their performance’ (E1)
  • ‘Merging both peers and self-evaluation techniques can be implemented to examine the overall performance of individual board members’ (G1)

Sub-theme 3f: Stakeholder Engagement

The researcher inquired on whether stakeholders are engaged and, if so, how often. Here are the interviewees’ quotes:

  • ‘Connections with various stakeholders were controlled in different ways by the company to ensure consistency’ (B1)
  • ‘Given that we are a publically listed organization, there is an investor relations department that is associated with all stakeholder problems and the Chairman of the board reports to the stakeholders on a frequent basis’ (A1)
  • ‘As a government business entity, weregularly interact with the investors including government and have clear guidelines on how to deal with public interaction’(F1)
  • ‘ Controlling stakeholders and stakeholder issues is a crucial component of great corporate governance, and we take it seriously’ (G1)

The data given by the respondents were divided into groups by utilizing reviews of documents, mainly company annual reports and some board minutes.  Reliability was found in the information received by means of the two methods of data collection: interviews and document review.  In summary, the information confirms that the procedure of regulating companies through the board needed the setup and performance of obligation at all levels to make sure fairness, representativeness, and good decision making is maintained.

Theme 4: Corporate Governance Challenges

In analyzing the problems, the following were the sub-themes identified: Board Capability, board diversity, management capabilities, decision making, Corporate Governance abilities, Board Engagement, and CEO Succession.

  • “Corporate governance in Rwanda has come a long way just as any other economic fabric of the nation particularly in the last two decades” (B1).

Sub-theme 4a: Board Capability

The capability of the board is key to governance. When the CEOs were asked about their views on their boards’ capability, here is what they had to say:

  • ‘The challenge of family-owned companies is that the majority of the board are the family members, therefore no skill multiplicity and a lack of business enterprise maturity by some members’ (C1)
  • ‘Many problems do not need to be talked about in the formal board meetings in family businesses. Generally, the chairperson informally talks with the CEO’ (C1)
  • ‘Independent board are challenged in understanding the track record of the company business enterprise’ (A1)
  • ‘I suggest that the chairman should inductindependent board memberson the track record prior to the board decisions’ (A1)
  • ‘Good and competent directors are spread thin and are not capable of offering the required stewardship that the organizations need’ (C1)
  • ‘This is a cross-cutting task that the boards experience in determining and appointing board members due to the shortage in the market’ (B1)
  • ‘It’s significant to grow the number of capable directors, and in the short run,the government should think about allowing senior civil servants to cover the gap or open up to the region and beyond’ (C1).

Sub-theme 4b: Board Diversity

Interviewee B1 mentioned gender diversity issues where most board participants are male and yet women and expected to be at least 30% of the board composition.  Here are their quotes:

  • ‘Lack of gender diverseness on the board is a problem that needs to be resolved and motivation of self-sufficient board members, as is the case with banks and it seems to address the problem rather than appointing from the executives of the organizations’ (B1).
  • ‘Unlike the public industry, the private industry doesn’t offer a learning opportunity, therefore limited people to serve on discussion boards, therefore the gender diversity on private sector boards’ (B1).

Sub-theme 4c: Management Capabilities

  • ‘Lack of expertise and maturity of the management teams is an obstacle to improving corporate governance in our company’ (C1).
  • ‘The lack of new managers’ orientation for a task affects the capability of staff’ (E1)
  • ‘Weak performance assessment and supervising systems in the company is an obstacle that needs to be resolved, right from the board panel to all staff, to enhance accountability greatly’ (G1)

Sub-theme 4d: Decision Making

  • ‘Decision-making at the board levels is difficult given that decision-making needs a democratic procedure and difference of opinion usually slow down the success of decision-making on the board’ (B1, E1, F1).
  • ‘Conversation among the board members is an obstacle to supporting delivery of the board, particularly given that the final board decisions are centered on the Chairman as a family business’ (G1)

Sub-theme 4e: Corporate Governance Abilities

  • ‘Board members not fully knowing or paying attention to the corporate governance and the purpose of it influences the practices of the board,andtherefore board members need to know their director responsibilities’ (D1)
  • ‘Board members do not recognize the purpose of corporate governance, placing too much time on talking about the details, numbers, and tables which can be assigned to the management rather than concentrating on the formulation of strategy,” (A1)
  • ‘More resources should be placed in conformity with the corporate governance guidelines, and education for directors is required to make them have a better comprehension about their functions and corporate governance’ (B1)

Sub-theme 4f: CEO Succession

  • ‘It is a very delicate issue to be talked about at the board as some executive directors worked well for the organizations for many years, so they are unwilling to talk about the succession planning” (A1).
  • ‘Succession planning is very significant, particularly in family businesses’ (B1).
  • ‘Succession planning is very vital. The human resource functionality is to usually weak in establishments and requires to be strategic enough.  Human resource executives will need to understand the business enterprise and drive it, which generally isn’t the case’ (D1).
  • ‘“Strong CEO” doctrine should be discouraged as the CEO doesn’t pay attention to the board then oversight is of concern, regardless of the good objectives of the CEO and the board,’ A1 said, stating this as an obstacle to the execution of very good corporate governance in Rwanda.

Sub-theme 4g: Board Engagement

Here are their quotes:

  • ‘Governance structures can provide results if sufficient self-reliance is given to directors’ (D1).
  • ‘Need for a strategic call for board skill diverseness and less investor effect on board composition’ (E1).
  • ‘Board members should be powerful on their views and avoid hearing and rubber making the ‘elephant in the room’ (G1).
  • ‘Company functions were directed by plans of the government and certain private sector-led choices which could not be made owing to public sector documentation’ (F1)

The researcher triangulated these results with the use of document reviews.  The similar results found with similar conclusions from each of the methods establishes validity. Both methods, interviews and documentary review, affirm that the difficulties in corporate governance, particularly in the financial sector and big companies in Rwanda, are progressively being dealt with and corporate governance is being valued.  Nevertheless, the skills level of senior administration and board members still stands out as an essential task experienced by the organizations.  The information points to the need for rewards from the government to maximize gender diversity in administration teams and the board.

Theme 5: Impact of Culture on Compliance

Companies are a product of their ethnicities.  This research theme focused on examining the culture predominant to the boards of directors of big companies in Rwanda. The following were the sub-themes identified:the conflict between public and private sector cultures, and management styles

Sub-theme 5a: Culture Conflict

  • ‘We do have a culture conflict of managing the private business with a government mentality’ (F1)
  • ‘Accountability and decision-making anytime the two ethnicities (public and private) are conflicting, particularly given that public industry governance is powerful on process-driven plans while the private industry is customer-driven is difficult’ (E1)

Sub-theme 5b: Management Styles

  • ‘We encourage a consultative management culture within our company’ (A1, B1, E1)
  • ‘A lot of emphases was placed on profit maximization’ (D1)
  • ‘There is no deliberate culture of motivating research and development’ (C1, E1, G1)

The researcher observed that though the companies were big by a number of workers and revenue, some were reasonably young, and their ethnicities were in the confirmative stages.

A company or a nation can and is defined by its way of life, so it was essential to know the cultural issues and modifications the CEOs wished to be put in place.  Here are their quotes:

  • ‘We are looking for a lifestyle of customer-centric service’ (G1)
  • ’We need to take on the lifestyle of being cost-efficient and profit-driven in all our activities to all departments of our business enterprise’ (D1)
  • ‘The private industry should be the engine of advancement for the development of Rwanda’ (F1)
  • ‘Board groups should devote more time to managing teams and staff, as we rarely appropriated any time to interact socially? If well integrated, it will enhance connections across the board and promote smooth processes in the organization’ (B1, E1)
  • ‘We should get rid of the “employer-employee” mindset and to interact with the individuals, they serve’ (G1)
  • ‘Boards should motivate junior management to be present at the board and have accessibility to board members to comprehend the business enterprise better and also whistle blow where essential’ (C1).
  • ‘As a young economic system, there should be some macro demand on business enterprise to offer and turn out to be the engine of growth in this country’ (D1).
  • ‘The traditions are too diverse’ (A1).
  • ‘We enhance a lifestyle of all-inclusiveness and co-existence’ (G1).
  • ‘Good moral behaviors and corporate lifestyle should be the drivers of management style’ A1)
  • ‘Developing ethical conducts, instead of just conformity with rules should be the focus’ (F1)
  • ‘Directors and top management must act as role models for the organizations, and they really need to pay attention to the moral management. By offering good ethical requirements, corporate governance can definitely be improved’ (B1)

The research studies were triangulated by making use of document review and observation.  The sources of the information were found to be reliable.  Furthermore, the literature review had shown the diversity in culture and that it differs from nation to nation.  To summarize, the results confirm the presence of culturally diversified boards of directors and administration within large, Rwandan companies, which differ greatly based upon on the maturity of the business enterprise, with multinationals having more powerful cultures.

Theme 6: Corporate Governance Effectiveness

The researcher desired to have an understanding of how efficient corporate governance was in Rwandan institutions and what components determined its effectiveness.In doing so, the following sub-themes were derived: Appreciation of Corporate Governance and National systems of Corporate Governance,

Sub-theme 6a: Appreciation of Corporate Governance

Here are their quotes:

  • ‘Corporate Governance in the banking sector has greatly improved and is effective’ (A1, D1)
  • ‘The function of corporate governance in Rwanda is to infuse and enforce the process and culture of openness and accountability in the conduct of enterprises in the private industry. This improves performance in the use of resources given to the boards and management of the enterprises to maximize profits to the investors and stakeholders’ (A1)
  • ‘I have been in Rwanda for more than 10 years. Corporate governance in Rwanda has come of age.  The banking industry is the head in corporate governance, mostly arising from the compulsory regulatory demands of the central bank that are consistently supervised and sanctioned’ (D1).
  • ‘Corporate governance in Rwanda has occurred along the way just like any other economic fabric of the country. The presence of the law and the codes provide an opportunity for the government to institute compulsory implementation of corporate governance concepts without exclusions and with strong penalties’ (B1).
  • ‘We have similarly seen particularly big companies in Rwanda adoring the value of corporate governance and implementing several principles. The exemption remains SMEs, particularly family-owned businesses’(D1).
  • ‘Corporate governance today is still constrained, but given the inbound quality of business enterprise owners that is altering for the better with more knowledgeable young people in the driving seat, they are anticipated to grasp corporate governance’ (E1) easily.
  • ‘Rwanda is just in a confirmative stage of being private-sector driven relatively than public, and hence the progress is amazing though a lot needs to be done’ (F1).
  • ‘Boards can provide results if they go above compliance to analyze board effectiveness across a wider range of measures’ (G1).
  • ‘Effective corporate governance must be emulated and compensated to allow fast-tracking as well as multiplier effects from its cross-cutting advantages to all stakeholders in the country. Rwanda’s recognized good public management and it should be emulated, and Rwanda should also be regarded for the best corporate and business governance in Africa and beyond’ (G1).
  • ‘Zero-tolerance position of the central bank, which guarantees due diligence of board directors prior to appointment, satisfaction of the needed non-executive board members, setting up and performance of the board and its committees, and a completely functional compliance division that reports consistently to the central bank on governance issues has improved corporate governance in banks’ (A1)
  • ‘Business enterprise failures in banking in the last 10 years, improved the need for stringent corporate governance both from the board as well as the regulator (central bank)’ (D1)

Sub-theme 6b: National Systems of Corporate Governance

  • ‘The enactment of the Rwanda corporate law and the needs to adhere to it or face sanctions plays a key role in the effectiveness of corporate governance’ (A1, B1, D1, F1)
  • ‘I think that some corporate governance procedures are more effective due to the fact that the advantages that come with compliance, like good bookkeeping and having experienced auditors, which saves the company dues and penalties from the Rwanda Revenue Authority’ (E1)
  • ‘The potential advantages of listing the organizations on the Rwanda stock exchange is a big factor in the efficiency of corporate governance in Rwanda’ (B1)
  • ‘Mass sensitization by the private industry federation and other acts also increased the effectiveness and buy-in to of corporate governance procedures and should be motivated’ (D1, E1, F1, G1)

The information acquired from the interviewees was triangulated by means of manuscript appraisals.  The data from the resources was established to be reliable.  The review of literature in Chapter 2 had shown that factors affecting or improving corporate governance, particularly in growing economies, needed emphasis of the rule of law, as well as its enforcement and education regarding it.  In conclusion, the triangulated results confirm that corporate governance can be efficient and the factors deciding its effectiveness are mainly laws, guidance, incentives, and education.

Theme 7: Corporate Governance Improvement

The key to this research, as a Rwandan,is to be impactful in creating corporate governance in Rwanda by determining key strategies and policy enhancements that take the corporate governance in Rwanda to the next level of benchmarking with the developed world.  Below are the opinions of the CEOs interviewed on what techniques the government and private sector can carry out for further advancement of corporate governance in Rwanda, based on the following sub-themes: Selection of board members, Corporate Governance knowledge,  Board evaluation,and Government Oversight.

Sub-theme 7a: Board Members Selection

Here are their quotes:

  • ‘The executive committee of the board should be more involved in the selection and appointment of the board members’ (B1)
  • ‘Initial selection of new board members should be made by an independent body’ (C1)
  • ‘The improvements shown in the banking sector should be emulated’ (D1)
  • ‘The current process of selection is restricting in nature as only senior executives are considered, ending in similar people serving on various boards, lower level candidates should be regarded as is done by government as there are a lot of unexposed yet highly certified diverse candidates’ (A1)
  • ‘Board Members should be engaged in choosing the board chairpersons’ (F1)
  • ‘Board directors desire to choose their leadership rather than be appointed by the main shareholder’ (G1)

Board Diversity was seen as a critical factor by some of the CEOs.Here is what they had to say:

  • ‘The board mix is crucial to make sure that all the essential competencies are manifested in the board and prevent an overdose of a specific skill and none of another’ (D1)
  • ‘Scarcity of strategy and human resource experts on the boards deprives the board of well-balanced perspectives for the company’ (E1).

Sub-theme 7b: Corporate Governance Knowledge

Here are their quotes:

  • ‘Board members mix up governance and management and in specific cases participated in managerial issues. Board members required to be enlightened on the distinctions between management and governance’ (D1)
  • ‘Boards required to cease rubber-stamping administration referrals. Some board members did only what the CEO mentioned and never came up with their ideas’ (B1, C1)
  • ‘Ignorance of the significance of corporate governance by businesses from the perspective of it being regulating rather than the right thing to do negatively affects the enactment or usage of corporate governance, considerably impacting the efficiency of companies in specific and the overall economy in general’ (C1)
  • ‘All stakeholders should make it their duty to mass inform across the board the advantages of corporate governance’ (F1)
  • ‘It shouldn’t be taken for granted that business enterprise owners particularly SMEs and especially family-owned companies need to know what is in for them to run their business enterprise well and therefore corporate governance techniques. Probably offering incentives for corporate governance, like restricting public tendering to businesses with proven corporate governance requirements, would motivate companies to conform to the concepts of corporate governance’ (B1)
  • ‘Corporate governance should be a responsibility of all as it has several advantages’ (C1)
  • ‘The board and management board groups desire to be properly educated in tactical administration as a means of reducing change opposition and improving the enactment of tactical strategies’ (E1)

Sub-theme 7c: Board Evaluation

  • ‘Continuous and regular evaluation of the efficiency contracts of board members required to be done for all’ (A1)
  • ‘There were no techniques of supervising the efficiency of board members; we need to learn from best practice’ (D1)
  • ‘Impartiality was necessary for the assessment of contracts relating to performance’ (G1)
  • ‘Caution should be performed in the implementation of corporate governance techniques as it also needs a high level of professionalism. For example, the board members can utilize internal auditors to eliminate the CEO or the auditors can record a large number of audit results with limited materiality just to alarm the scenario and question management conduct”.  Checks and balances and constant training are essential to achieving the full advantages of corporate governance’ (D1)

Sub-theme 7d: Government Oversight

Here are their quotes:

  • ‘Corporate governance facilitates companies to run effectively with clear guidelines and procedures which reduce the risk of failure of such companies. Taking into consideration the main contribution of corporate organizations in the economy, the less likely companies are to fail, the less probably the economy can collapse’ (E1)
  • ‘Corporate governance should be handled as a national issue given its importance in nation building’ (F1)
  • ‘It’s essential to transform political and economic governance plans from relationship-based methods to rules-based systems’ (G1)

The information acquired by interviewing the participants was triangulated by means of document reviews.  The information from the research as well as the documentary review was established to be reliable.  The review of literature in Chapter 2 had shown that controlling boards required to act in order to enhance the control of companies.  In conclusion, the discoveries validate that controlling boards of Rwanda’s companies required to enhance the governance of their specific companies and, while the large companies have made considerable progress, the SME segment should be offered more attention.


The chapter reviewed the information acquired from this study.  The researcher described the profile of interviewees and explained the techniques used to analyze the data.  Examination of the information gathered relating to the seven research questionspresented in Chapter 3 was presented.  Table 3 and Table 4 provides a summary of the themes identified and how they address the research questions.

Table 3

Summary of Themes

  Themes Sub-Themes
1 The important role of Shareholders 1a Insufficient Board Oversight   1b Adequate Sourcing of Funds
2 Constitution of Boards 2a Inadequate Stakeholder representation   2b Board Composition
3 Adequacy of Board Establishment, Operation and Accountability 3a Board Establishment   3b Performance and effectiveness of the board 3c Management Control 3d Strategy Oversight 3e Board Evaluation 3f Stakeholder Engagement
4 Corporate Governance Challenges 4a Board Capability   4b Board Diversity 4c Management Capabilities 4d Decision Making 4eCorporate governance abilities 4f CEO Succession 4gBoard Engagement
5 Impact of Culture on Compliance 5a Culture Conflict   5b Management Style
6 Corporate Governance Effectiveness 6a Appreciation of Corporate Governance   6b National Systems of Corporate Governance
7 Corporate Governance Improvement 7a Board Member selection   7b Corporate Governance Knowledge 7c Board Evaluation 7d Government Oversight

Source: Created for this study

Table 4

Summarizing the themes under each of the research questions

  Research Questions Themes under the question
1 What is the role of shareholders in governing the company? The important role of shareholders
2 How are the boards of companies established? Constitution of Boards
3 How are the boards set up, how do they function, and how are they held accountable? Adequacy of board establishment, operations,and accountability
4 What do corporate governance challengeslarge Rwandan companies encounter? Corporate Governance Challenges
5 Which boards of directors’ culture prevails in large Rwandan companies? Impact of Culture on Compliance
6 How effective is corporate governance today and which factors determine this effectiveness? Corporate Governance Effectiveness
7 What should pertinent concerns be addressed for the additional improvements of corporate governance in Rwanda? Corporate Governance Improvements

Source: Created for this study

Chapter 5: Conclusions and Recommendations

The main objective of this study was to analyze the corporate governance procedures used by big companies in Rwanda.  This chapter is arranged as follows: an overview of the outcomes of how the aims of the research were tackled, discussion of the outcomes offering a sufficient synthesis with previous research along with comparing with the data gathered and analyzed, conclusions and practical recommendations from the research, references for more research, and, lastly, the conclusions of the research.

Summary of the Results

The objective of this studywas to look at the efficiency of corporate governance procedures, which influence an organization’s overall performance resulting in accountability to stakeholders and other investors through suitable corporate reporting procedures.The following overview describes how the purposes of this study were addressed.

The growth of corporate governance procedures from the perspective of the Rwanda business enterprise environment was addressed in Chapter 2.  The political and economic setting of Rwanda was influenced by years of undesirable governance, climaxed with the genocide towards the Tutsi in 1994.  The economic system of Rwanda nearly collapsed during the genocide; nevertheless, since 2000 it has shown a constant development rate in-spite of the unpredictability of the environment.  This may have been attributed to the start of regulatory changes in corporate governance and corporate law created to enhance central and peripheral investments.  A charitable code of most effective practice on corporate governance was founded in 2009.  It sorted out the corporate governance deficits that had resulted in some bank failures, as mentioned in Chapter 2, and motivated thekey themes mentioned in Chapter 4 and restated here: (1) Important role of Shareholder; (2) Constitution of boards; (3) Adequacy of board establishment, operations, and accountability; (4) Corporate governance challenges; (5) Impact of culture on compliance; (6) Corporate governance effectiveness; and (7) Corporate governance improvements (Kayihura 2013).

The research sub-themes of (2a) inadequate stakeholder representation and(2b) board composition revealed that efficient directors are an essential determining factor of efficient corporate governance, indicating that effective governance practices should address issues of interests throughout the board.  Great corporate governance practices also ensure accountability via dependable and valuable financial information, which promotes the efficiency and integrity of the trade, resulting in financier assurance.  Thus, it is obvious that the companies, mostly the banks, in Rwanda that have put in place the self-sufficient board components have obtained investor confidence and two banks in the previous 10 years have been outlined and pulled in external capital.

Theme 2, which discusses the constitution of boards with regard to director liberty, presents difficulties to the instructions suggested by the Rwanda Central Bank, which suggest that non-executive directors should be self-sufficient.  Nevertheless, it was discovered that in a circumstance where the governing investors designate the vast majority of directors, self-reliance still is a difficult task and will need a significant amount of efforts to accomplish, especially because it can be opposed by the outsized stakeholders (Berglof&Claessens, 2004).  Direct appointment by investors, as presently exercised in Rwanda, also increases the problem of standards.  The results from most of the organizations show that the procedure of assigning directors is not well guided by obvious standards.  This recommends that such appointments should not be structured to well-defined needs.  The organizations are also not achieving the demands of the suggested rules by not explicating the appointment conditions.  This results in the bottom line that present practices require to be changed to promote the efficiency of corporate governance.

Theme 3 examines board establishment, operation, and accountability verifies the notion with regard to the function of the panel in a management setting.  Sub-theme (3b) performance and effectiveness of the board indicated that an efficient panel of administrators is an essential determining factor of efficient corporate governance, usually where big controlling investors do not deal with control factors that are the areas of interest of the board.  It can be determined that, when big stakeholders turn out to be fully engaged in management, boards of directors evolved into only consultative committees to the management.  This is evidence of the literature, as big investors tend to leave other corporate governance mechanisms ineffective (Berglof&Claessens, 2004).

Theme 3 additionally states that, mostly, compliance with the concepts of corporate governance that are being suggested pertaining board constitution, concepts which are centered on agency theory, does not actually lead to efficient panels in the control performance as it would be anticipated.  Nevertheless, there are reasons to believe that significant numbers of non-executive directors on the board are used in the management performance in one way or another.  This results in the summary that, in the absenteeism of stakeholders who carefully monitor management, a significant number of independent non-executive directors are very cooperative in governing management.

The findings of this study also revealed an essential part of panel stability.  The array of knowledge, diversity, and characteristics that directors from elsewhere present to the panel is connected to the resource dependency theory.  This theory, as mentioned in Chapter 2, recognizes the need for bigger companies to develop a better connection with other companies.  Thus, a suggestion in favor of resource dependence theory is the alternative connection due to rising environmental indecision, which forecasts a connection involving improbability or environmental dependency as well as panel configuration as measured by the percentage of external directors and also the magnitude of the panel (Hillman, Cannella, &Paetzols, 2000).

Finally, this research suggests a compulsory mechanism of applying the code of corporate governance throughout the board with the use of a good example set by the Rwanda Central Bank in controlling the financial sector.  The Rwanda Development Board, as well as other stakeholders, should utilize this model with a focus on corporate governance practices, which includes panel construction and reporting that result in accountability to all investors.

Discussion of the Results

Based on the findings of this research, stockholdersplay a pivotal role in the management of the company. The literature reviewed in Chapter 2, subsection overview of corporate governance. Denise and Mcconnell (2003), pointed out that large shareholders have the motivation to expand resources on monitoring management.They have control rights in the stock shares of the organization stock.  The function of the investors in the organization is minimal, nevertheless, as they have neither the right nor the responsibility to control the day-to-day business activities of the company.  However, stockholders under corporate governance have various rights, especially, the right to information on the organization, the right to make recommendations on the governance and control of the organization, and the right to vote and dissent on crucial issues, such as the selection of directors and essential changes in the company—for instance, mergers and acquisitions, sale and disposal of property, borrowing, dissolution of the business enterprise, modifications in governing documents (e.g., the investors agreement), and changes to the organization charter and bylaws. This is consistent with Berglofand Claessens (2004) that assert that large shareholders are seen as the most important and effective corporate governance mechanism in the developing world.

Insufficient board oversight.The results discussed in Chapter 4 put to the fact the

procedure by which stockholders convince the administration to perform in their interest, therefore giving a level of assurance essential for investment markets to effectively operate (Asiimwe et al., 2015).  In dealing with the interviewees and in the documentation review, the information collected on the function of the stockholders sub-theme (1a) insufficient board oversight, was constant with the literature reviewed on agency principle.

Good corporate governance can be applied to bring about required adjustments in agent-principle associations, directing the agent to act in ways that safeguard the principle’s problems.  The principal, who is demanding the agent to act on his or her behalf, need to have an adequate amount of information concerning the agent’s performance of the necessary tasks.  Agents, alternatively, must be incentivized to perform in association with the principal’s pursuits.  Agency theory can help create these incentives by concentrating on what inspiring factors result in agents’ actions.  Incentives that motivate misbehavior must be taken away, and recommendations that discourage ethical hazard must be carried out.  Knowledge of various relevant factors is very instrumental in ensuring that companies put up an effective corporate policy (Kayihura, 2013; Mwika, 2012).

The case of large Rwandan companies revealed various roles of the investors, some with very limited impact, particularly in the listed companies, and some others with hands-on obligations, particularly the family-owned companies and also the government business enterprises.  It is advised that the function of the stockholders remains limited to minimize the principle-agent issues that occur when the agent and principal pursuits are at odds.  Businesses should endeavor to stay away from such issues through excellent governance guidelines that clarify the functions and obligations of all investors.

Constitution of Boards.Because of the results acquired, it can be deduced that boards

are created with a purpose towards representing all the key investors.  The outcomes indicate the reality that these companies undertake stockholders approach to corporate governance, as discussed in Chapter 2.  The stockholders’ theory, as Mallin (2010) describes, is centered on the principle that companies really stand to gain a variety of stockholders as compared to only capitalizing on the fortune of investors and that an organization’s topmost administration is worried about lasting success.  In accordance to Freeman (2010), stockholders are those people or groups who have a connection with the company that results to them influencing, or being influenced by, the firm’s achievements of its objectives.

Inadequate stakeholder representation.The shareholder theory is in link with advice-

giving supervision approaches that succeeded in the companies investigated. Turnbul (1994) clarifies that stakeholder involvement in a company’s decision procedure promotes proficiency while reducing conflicts.  This study affirmed that companies came up with conclusions after appropriate stockholders’ wishes were used.  For instance, government bodies were consulted as ASX Corporate Governance Council (2007), OECD (2004), and the Business Roundtable (2010) inspire panels to recognize the genuine comforts of stockholders.  It was viewed that most boards, particularly government business enterprises, had a good representation of the stakeholder interests, mostly as independent board members (Kayihura, 2013).

This strategy of the selection of board members’ focuses on stockholders’ representation and also, subsequently, results to some boards lacking critical expertise, such as strategic management.  It was described that this anomaly needs to be tackled.  It is recommended that panels contain a suitable combination of abilities, perspectives, and freedom necessary for perfect corporate governance.  This research recommends stockholders of companies in Rwanda should be well-informed to have an understanding of the best methods of coming up with boards and the outcomes support these suggestions.  The Cadbury Report (1992) suggests that boards be constituted to be able to add value to their companies.  Therefore, the researcher advocates that the board formation should be improved by choosing members based mostly on wisdom, capabilities, and experience, not centered only on their representativeness.  Additionally, all members of the board should be informed to comprehend the principle of corporate governance.

Boards Establishment, Operation, and Accountability

The way the board is established is key to the execution of corporate governance, post-establishment, its operations should be governed by internationally accepted best practices and be open to accountability by all stakeholders.

Sub-theme 3b) Board Establishment;

  • ‘The structure of our board is largely determined by the bank corporate governance regulations of the central bank, and it ensures a good mix of independent and executive directors of the board’ (E1)
  • ‘The board of our company is representative of most stakeholders especially government, shareholders and clients’ (D1)

These findings are consistent with the stakeholder theory and, as indicated by Jo and Harjoto (2011), a company’s target could be accomplished by adjusting the clashing interests of these different partners.

Sub-theme 3b) Performance and effectiveness of the board.Consistent with previous

studies (Denise & McConnell, 2003; Styles & Taylor 2002), performance and effectiveness of the board strengthens the argument in the literature that boards of directors can be an effective corporate governance mechanism. Nevertheless, given the unique circumstances under which Rwanda’s large companies function, and the contrast between developing and developed nations, it is essential to fine-tune board activities to fit existing conditions.

Sub-theme 3c) Management Control;

  • ‘Hiring senior management, which includes the CEO, was a main duty of the board as a part of corporate governance in our company’ (F1).
  • ‘Human resource management isn’t seen and handled as a major strategic function in the companies’(C1).

The research unveiled that boards were carrying out a tactical management performance by accepting reforms and offering a way forward to the companies.  The purpose of tactical controlling is to make a company suitable to a transforming environ.

  • ‘The boards were in charge of supervising the staffing prerequisites of the companies by accepting the organizational framework, staffing, and skill set for the jobs recognized’ (A1).

Thus, they accepted all new appointments and promotions of employees at the senior management level and also the CEO approved others. These findings were consistent with the managerial hegemony theory in particular. Osborne and Ball(2010), asserts that the board of executives is a mere statutory addition that assumes an inactive part during the time spent coordinating companies.

Sub-theme 3d) Strategy oversight. A different issue was the oversight duty of the boards

on the part of the stockholders particularly supervising the monetary and physical resources in all companies.  ‘Accomplishing strategy oversight needs the boards to work morally, also to make conclusions appropriately, apart from that it demanded to make precise and appropriate findings of money matters, ownership, presentation and governing affairs’ (B1).  These results focus on the need for effective due diligence in the consultation of directors as well as the setting up of the board.

Sub-theme 3e) Board Evaluation. The research demonstrated that board meetings of

most of the organizations interviewed were organized quarterly and offered chances to plan on the reports of various committees.  ‘Remarkable sittings were organized when important concerns came up, such as acquisition or disposal of assets’ (A1).  The researcher additionally found that boards ended up being divided into smaller sections, such as audit, finance, governance and risk management, investments, human resource, and executive smaller committees.

‘The utilization of auditors, both external and internal and provided extra controls as well as accountability measures to improve governance’ (C1).  Some of the companies, particularly the public companies, presented a revelation of financial, performance, and information used to operate as a resource utilized to improve governance.  All companies, as expected by the Companies’ Act, presented annual audited accounts to the investors, some revealed to the open public, like the banks, others didn’t, but were available for inspection by any ordinary person who desired to confirm them through the Rwanda development board.

The executive management was assigned to the management groups under the management of the chief executive officer.

  • ‘The board obligation was primarily limited to the selection and supervising of experienced CEOs and other high-ranking managers’ (D1).
  • ‘Most management groups met weekly while other individuals met at least monthly’ (F1).

However, respondents felt that there is a need for more accountability by the board;

  • ‘We have no board evaluation, and we recommend that board evaluation, especially performance of non-executive board members, should be done’ (D1)
  • ‘We have no board evaluation, and board members aren’t accountable’ (F1)

The findings are consistent with the recommendations of the SOX (2002) and OECD (2010) guidelines.

Corporate Governance Challenges

In the execution of corporate governance practices across different companies, several challenges are encountered by the governance agents especially the CEOs of the companies. These challenges are discussed in the sections below:

Sub-theme 4a) Board Capability. The capability is defined as “a set of complementary resources, administrative skills,and practices, and assets with merit to generate an adaptive and valuable output” (Miller, 2002, p.964)

  • ‘Lack of skill multiplicity at the board level, particularly in a family owned businesses, prevents the implementation of corporate governance practices and for this reason, independent board members should in particular cases be mandated for effective governance’ (D1).
  • ‘Most board members have a minimal appreciation of corporate governance demands and intentions and as a result, pay limited attention to corporate governance in addition to the aim of it, which affects the performance of the board and regardless of whether panel members fulfill their directors’ responsibilities’ (A1).
  • ‘Independent board comprehension of the history of the company can be minimal, and it was recommended that they should have improved induction processes and also that the chairman should describe important background information to them ahead of the board decisions’ (E1).

Sub-theme 4b) Board Diversity. Diversity is considered, by some respondents, as a key governance issue;

  • ‘Lack of gender diverseness on the board is a problem that needs to be resolved and motivation of self-sufficient board members, as is the case with banks and it seems to address the problem rather than appointing from the executives of the organization’ (B1)
  • ‘Unlike the public Industry, the private industry doesn’t offer a learning opportunity, therefore, limited people to serve on discussion boards, therefore the gender diversity on private sector boards’ (B1)

These findings on the challenges of board diversity are consistent with the resource dependency theory discussed in Chapter 2.

Sub-theme 4c) Management Capability;

  • ‘Lack of practical experience and maturity of the management teams is a challenge to improving corporate governance in our company provided that Rwanda is just regaining from the Genocide and it requires time to train the significant mass of capable people across the board’ (B1).
  • ‘Weak overall performance evaluation and monitoring techniques in our companyis a concern that needs to be tackled right from the board to all staff to improve accountability and continual improvement in adherence to corporate governance principles’ (C1).

Findings on management capability align with the assentation,“Any partner is significant if their venture is, in some shape, subject to hazard from the exercises of the association” (Grant, Compaoré, & Mitchell, 2014, p.923-934).

Sub-theme 4d) Decision Making

  • ‘There is a practice of unanimous acceptance of conclusions at the board level, as the board needs a lot of consensus building, which in the majority of cases is very challenging and time costly in decision making, particularly when the competencies at the board are very diverse and minimal incapacity’ (C1)

This finding on decision making is consistent with the stewardship theory. Dalton and Cannella (2003) argued that managers and directors should safeguardshareholders’ interests by making right decisions to increase the performance of their organizations because they also want to protect their market reputations as good decision makers.

Sub-Theme 4e) Corporate Governance Abilities

  • ‘The CEO was the prominent factor,and the board conducted their duties as decided by the CEO, therefore negatively impacting on the function of the board in overseeing the company’ (F1)
  • ‘Board members do not recognize the purpose of corporate governance, placing too much time on talking about details, numbers, and tables which can be assigned to management rather than concentrating on the formulation of strategy’ (A1)
  • ‘More resources should be placed in conformity with the corporate governance guidelines and education for directors is required to make them have a better comprehension about their functions and corporate governance’ (B1)
  • ‘A common problem faced by the boards is determining capable and eager directors to function on their boards. The few competent directors are spread thin and are not capable of providing the required stewardship for the companies. It’s essential to grow the number of directors, and this will need joint initiatives by the government and the private industry of Rwanda to invest and accredit directors to function on the boards’ (C1).
  • ‘The independence of the board is a problem the board encounters and negatively affects the board performance’ (E1)

This is consistent with Hillman and Dalziel (2003) findings under the resource dependence theory that the main source for the achievement of different resources required by the firms is the board of directors.

Sub-theme 4f) CEO Succession. Board management on the succession procedure of the

CEO is considered a challenge and, without exception, all organizations interviewed had no succession strategy for the CEO, although some had clear procedures for the succession procedure of the CEO.

  • ‘Succession planning is very vital. The human resource functionality is so usually weak in establishments and requires to be strategic enough. Human resource executives will need to understand the business enterprise and drive it, generally isn’t the case’ (D1)
  • ‘”Strong CEO,” doctrine should be discouraged as the CEO doesn’t pay attention to the board then oversight is of concern, regardless of the good objectives of the CEO and the board’ (A1).

These findings are consistent with Charan, Drotter, and Noel’s (2001) assertion that leadership succession should be undertaken at every level of management since it is a dynamic, rather than a static process.

Sub-theme 4g) Board Engagement

  • ‘Communication issues among the board members were cited as a problem to service delivery of the board, particularly given that final board decisions are based on a collective decision’ (C1)
  • ‘Board members should be powerful on their views and avoid hearing and “rubber stamping” the “elephant in the room”’ (G1)
  • ‘Government being the major investor of the companies is a problem in that the company procedures were well secured by government procedures along with certain private sector-led decisions could not be made due to necessary public sector bureaucracy’ (F1)

Impact of Board Culture on Compliance

Companies are a product of their ethnicities.  This research question focused on examining the way of life prevailing in the boards of directors of big companies in Rwanda and arrived at various conclusions.

First, Rwanda’s large companies have several cultures.  The literature reviewed in Chapter 2 signifies that organizational culture has been described in several different ways, which is a signal not only of its significance, but of its challenging and intangible nature (Van der Post, de Coning, & Smit, 1997).  This shows that organizational way of life stems from a mix of shared values, norms, beliefs, and customs of different underlying assumptions, and personality legacies that have developed over time and have turned out to be collectively held by organization members (Schein, 2010).

It was mentioned that some business ethnicities are a hybrid.  This is particularly true in government business enterprises that are an aspect of the public sector as well as part of the private sector, given that in their shareholding, they are anticipated to conform to public finance governance specifications and given that they are business enterprise entities that similarly have to conform to corporate governance practices.  This generates a challenge, particularly in accountability and decision-making anytime the two cultures are in conflict, particularly given the fact that public industry governance is strong on process-driven procedures while the private industry is more customer-driven.

All interviewees revealed that there was no purposeful culture of motivating research and innovation.  This is common of profit-oriented companies.  Nevertheless, the time has shown that companies that make investments early in research stand to acquire a lot in the future, particularly given that the tastes and preferences of the customers are transforming by the day.  He suggested that the big Rwandan companies need to have a culture of research and development.

The researcher discovered that, although the companies were large by the number of sales revenue and employees, some were relatively young and their ethnicities were in the confirmation phases.  The researcher also discovered that consultative administration techniques are applied in every company.  For instance, various stockholders are constituted in boards.  Good emphasis is placed on stockholders.

There wasn’t a culture of team-building amongst the senior management and junior management or among the board and staff.  It was urged that team-building sessions be granted priority and become an aspect of the culture of the companies to improve ownership and commitment to the companies by all.

Finally, the researcher desired to discover what ethnical changes the participants would like to see.  It was recognized that customer-centric service delivery is a culture that organizations wish to see, combined with a cost-efficient and also profit-driven culture.

In conclusion, this subsection verifies that the ethnicities in Rwanda’s large companies are different.  This discovery is constant with the predominant literature on organizational culture and organizations, and it also facilitates the undertaking the consequences of ethos on the corporate governance practices of Rwanda’s big companies ought to be discussed.  The researcher, thus, suggests that board participants ought to be properly educated to have an understanding of the effects of customs on the governance of the companies.

Corporate Governance Effectiveness.The researcher desired to understand, in a

general sense, how efficient corporate governance in Rwanda was in its institutions and what aspects determined its performance. Corporate governance in Rwanda is at various levels of development in Rwanda.  Nevertheless, corporate governance has a very minimal history in Rwanda as most pursuits, notably the institutional codes of corporate governance as well as the company law, have been put into law in just over a decade.

Rwandan large companies have, to a decent extent, adopted corporate governance.  The leader in applying corporate governance is the banking industry.  Given the strict demands set by the central bank, all banks, by law, have to adhere to the corporate governance requirements, which includes setting up a compliance unit that advises the board on corporate governance challenges.  This has been very efficient, and Rwanda is the only nation in the East African region that has not seen a bank failure in the last ten years (Mwika 2012).

The present Rwanda corporate law is very obvious on the corporate governance prerequisites with clear functions for investors, board, and management.  It also presents possible penalties for non-adherence of the requirements, particularly by the board.  What needs to be done for corporate governance to be more efficient in Rwanda is for the Rwanda Development Board to put into process the provisions of the law and have dependable people. Some corporate governance procedures are more efficient because of the advantages that come with compliance, such as having great book-keeping and experienced auditors, which helps you to save the company fines and charges from the Rwanda Revenue Authority.

Potential future advantages from listing the organizations on the Rwanda stock exchange is a big point in the efficiency of corporate governance in Rwanda.  These have previously been enjoyed by two banks in Rwanda, and they are establishing a good case for other big and smaller companies to put into practice corporate governance practices and promote investment in their organizations.Purposeful mass sensitization by the private industry federation and other acts, particularly the Rwanda government, also enhanced the efficiency and buy-in to great corporate governance practices, and this should be inspired (Mwika 2012).

Corporate Governance Improvement.The literature reviewed in Chapter 2 reveals

that corporate governance guidelines and practices in establishing nations need to be enhanced.  Nevertheless, to be enhanced, current flaws must be diagnosed.  Various discussions arrived at the following results:

To start with, boards will need to make a distinction between managing and governing.  The inability to make this distinction lead to some board members got mixed up in management concerns.  In accordance with the Financial Reporting Council (2010), board roles and top management functions are distinct.  This research suggested that board members demand being well informed in what their functions entail and what management groups do.  Furthermore, board members require being able to recommend they’re good ideas and not just follow management suggestions.  The Financial Reporting Council (2010) motivates non-superior administrators to be innovative when developing technique and to question the views of superior administrators.  Thus, this study suggests assigning government bodies to minimize their selection to new board members who are truly qualified individuals.

Ignorance of the significance of corporate governance by organizations from the viewpoint of it being regulatory instead of the suitable thing to do since it detrimentally affects the adoption or implementation of corporate governance and significantly impacts the efficiency of organizations in specific and the overall economy in general.  Thus, for future growth of corporate governance, all investors should make it their duty to mass inform across the board the advantages of corporate governance.

For the future growth of corporate governance, it should not be taken for granted that business enterprise owners, particularly SMEs and mainly family-owned businesses, have an understanding of the advantages of corporate governance.  Instead, they need to be educated about what is in it for them to operate their companies well and to adhere to great corporate governance procedures.

Boards need stability in their constitution to prevent the issue of getting overloaded with individuals having certain capabilities while lacking individuals with other capabilities.  More appropriately selecting board members can accomplish this stability.  Some interviewees thought a need for board members to be pulled from a pool of attainable appointees, and that a self-sufficient team ought to make the appointments, as it happens with the Central Bank.  Furthermore, some participants held the perspective that the suggestions of CEOs required to be taking into consideration when hiring board affiliates.  Having the appropriate range of skills would have granted boards to provide more sensible viewpoints on matters.

There is a need to do aside with parts where issues of curiosity exist and to adhere to the concepts of great strategic management.  Moreover, board member efficiency agreements should be examined yearly to keep from maintaining underperforming individuals (Financial Reporting Council, 2010).

Care should be taken to implement corporate governance procedures as it also needs a high level of reliability and if not applied well, it can cost time, money, and have negative effects on the efficiency of the company.  For instance, the board members can utilize internal auditors to get rid of the auditors or CEO can review a big number of audit results with minimal materiality just to raise the circumstance and concern management conduct.  Checks and balances and constant training are significant to accomplish the full advantages of corporate governance.

Corporate governance facilitates companies to operate effectively with clear guidelines and processes that reduce the risk of failure of such organizations (OECD 2014).

  • ‘Looking at the major participation of corporate organizations in the economic system, the less likely organizations are to fail, the less likely the economic system can collapse, so corporate governance needed to be treated as a nationwide issue and provided the significance it deserves’ (A1).
  • ‘It’s essential to change political and economic governance preparations from relationship-based techniques to rules-based programs’ (C1).

The findings validate that there are a lot of appropriate concerns for the future growth of corporate governance in Rwanda and the results are reliable with the literature reviewed in Chapter 2, which showed that continuous change and growth are essential features of effective companies(Alagathurai, 2014; Business Roundtable, 2010; Cohen, Dey, & Lys, 2013).

Conclusions and Practical Recommendations

Provided that corporate governance can impact the efficiency of both unrestricted and restricted organizations, it is essential that the government explores and builds the corporate governance concepts, particularly with respect to financial divulgence and openness.  This will develop a relationship of confidence with stockholders, together with clients, society, and the government.  Some of these investors, particularly the customers, will, at some point, deposit their funds in these organizations, especially if they are outlined on the stock exchange locally or globally (Change, 2012; Coyle, 2006;Kayihura, 2013).

The results of this research have a political, theoretical, and practical significance.  The research broadens the boundaries of current information by identifying specific challenges introduced by boards of companies in Rwanda.  The literature review identified inadequate research aimed at corporate governance both in Rwanda as well as in sub-Saharan Africa.  The significance of the private precinct, which comes with the role performed by the supposed organizations in the lives of several shareholders, cannot be overstated.  Provided that Rwanda is a developing nation, other developing nations in Africa and all around the world can gain from the results of this study if their circumstances are similar.  These outcomes will help intellectuals in the industrialized world recognize circumstances in the unindustrialized world.  Experts and business enterprise consultants can achieve these results an understanding of the problems of corporate governance in sub-Saharan Africa that will help them in providing useful assistance when they are called upon.

In bringing out the results and practical ideas to demonstrate how our study outcomes assist the practical suggestions, the findings and the themes are presented under four sub-sections: establishing corporate governance in Rwanda, investor accountability, board responsibility, and participation in research.

Building corporate governance in Rwanda.  Because of the theoretical results, Theme

6 on corporate governance effectiveness, and Theme 7 on corporate governance improvements, it has been suggested that the fundamentals for the growth of efficient corporate governance are presently inadequate in Rwanda, and need building and firming up.  The important problem is the implementation of legal guidelines and code of practice when it comes to corporate governance.  As it is in other upcoming nations that are evolving, like a groundwork is crucial for the growth of capital trading arcades which are seen as important for the continue able growth of nations (Berglof&Claessens, 2004; Kayihura, 2013; Kayitesi, 2013; Oman et al., 2003).

The suggested techniques for enhancing the implementation of legal guidelines and protocols include the training, sensitization, and raising awareness to all stockholders with reverence to issues of corporate governance.  This will make it possible for all stockholders to value the concerns surrounding corporate governance and promote the prospects of developing suitable legal guidelines for Rwanda as well as the panorama that these legal guidelines will be imposed in practice.

It is important to boost the outline of corporate governance as a significant subject in trade and industry development.  Presently, there is a limited debate in Rwanda on the concern of corporate governance, which is observed as showing a lack of knowledge of its benefits for economic expansion (Mwika, 2012).  The media should be motivated, by being rewarded, to report corporate governance problems and become more systematic in such issues.  This will play a role in raising the profile of corporate governance as an essential development matter.  This will demand sensitization and creation of awareness for the media channels.  These suggestions could be applied by Rwanda Development Board in a venture with the Ministry of Trade and Industry (Kayihura, 2013).

Shareholder responsibility.  Given the theoretical results;Theme 1 on important

role of shareholders;Theme 2 on the constitution of boards; and Theme 3 on the adequacy of board establishment, operations and accountability, it has been suggested the challenge of the responsibility of organizations to Rwandan society has considerable significances for the growth of corporate governance in Rwanda.  ‘Corporate governance needs to be regarded as a public plan issue, and initiatives should be created by all to separate the business enterprise decision-making procedure from the government/political decision-making procedure’ (F1).

The company of internal corporate decision-making procedures plays an essential role in helping to shield investors.  ‘The chairman’s position of the yearly general meeting is central here’ (E1).  If one of the directors is the chairman of the meeting, he may have attended in preserving the board from investor condemnations.  It is suggested that the organization of yearly general meetings is restructured to allow stockholders the opportunity of utilizing their power.  ‘The chairperson of the yearly general meeting should not be the chairperson of the board or even a director but an individual self-sufficient from the management and the board of directors and ought to be chosen by investors for every single yearly general meeting’ (B1).  This will make sure that all directors, which includes the board chairman, become responsible to investors.  To give impact to this suggestions, regulatory organizations such as the Rwanda Utility Regulation Agency, the Rwanda National Bank, the Capital Markets Authority, and theRwanda Development Board should contain these suggestions in their demands.

Board responsibility.  Based on the theoretical results;Theme 2 on the constitutionof the

board; Theme 3 on the adequacy of board establishment, operations, and accountability; and Theme 4 on corporate governance challenges, it has been suggested Board responsibility entails the following viewpoints:

  • Selection and Appointment of Directors

‘To hire from the marketplace demands the progress of a marketplace for directors’ (D1).  The situations have revealed that organizations presently hire often retired public servants or present government workers as directors, and they are generally not especially experienced with respect to private sector problems.  This means that it is important to create a group of directors from which organizations can obtain experienced people.  ‘Therefore, it is necessary to start on establishing corporate governance by means of teaching programs.  This could be tackled by institutions of greater learning, for example, colleges, and universities presenting programs on corporate governance’ (C1).  This is constant with initiatives to create effective corporate governance in other developing nations in transition (OECD, 2003).

  • Director orientation

‘The board members on an appointment ought to be informed of the functions they are anticipated to carry out.  Induction procedures for new participants need to be wide-ranged so that new participants know what they are anticipated to do’ (A1).  “Also, the difference between controlling and overseeing should be described to them, so they know what problems are management duties and what challenges are the board’s obligations’ (B1).  This will keep board members from spending their useful time on management team concerns.

  • Developing director independence

‘Enhanced emphasis on corporate governance issues all over the world has induced companies to concentrate more on panels with a vast number of external administrators simply because non-executive directors are a mechanism utilized to carry out the inspecting role of the panel and improve panel self-reliance’ (C1).  ‘The board’s existence is also regarded to enhance the efficiency of inner management’ B1).  Thus, panels are made up of self-regulating external administrators as a key process to guarantee board responsibility to investors, which was documented in the discoveries of this findings (Change, 2012; Coyle, 2006;Kayihura, 2013).

‘The director independence problem is a significant problem in Rwanda’ (A1).  Tackling it requires directors to develop proposals to investors about possible prospects that can be voted or dismissed by investors’ (E1).  Directors are supposed to be hired from the industry by implementing an open procedure of welcoming programs from the general public.  This problem can be tackled by boards of directors.

  • Director evaluations

It is suggested that organizations present board assessments.  This is in connection with international initiatives to enhance the performance of boards.  Demb and Neubeauer (1992) advocate that boards should present director assessments and responses.  Directors need to determine standards for assessing specific directors.  The standards should emphasize significant concerns for the particular corporation and need to be connected to the types of judgments and procedures essential for the efficient output of the organization.  Assessments should be conducted in two stages: the stage of the board as a whole, and the stage of specific directors and also the CEO.  Assessment criteria need to indicate the specific performance of the individuals being assessed and need to be connected to the standards for recruiting directors.  Boards of directors can put into practice this commendation.

  • Board structure

The results have proven diverse outcomes with respect to the leadership framework identifying the performance of corporate governance.  It is suggested that the usage of a divided leadership framework should be assessed, and its importance identified on a case-by-case basis.  This is also the situation with the structure and organization of board committees.  A company’s board of directors, in cooperation with its stockholders, can handle this matter.

The board structure in this research was reinforced by agency theory, ensuing in accountability to investors.  This is due to sufficient surveillance by a greater percentage of external directors’ help to safeguard the curiosity of the investors from the egocentric activities of the managers (Fama& Jensen, 1983), reduces agency expenses, and will increase shareholder capital.  Moreover, this research was also helped by resource dependency theory, simply because non-executive directors deliver practical contact and a wide range of expertise, which is a significant part of firms managing in an insecure political and economic setting as in Rwanda.

  • Board Balance

Results of this research also described an essential part of board equilibrium.  The array of experience and qualities that external directors deliver to the board is connected to the resource dependence theory.  This theory views the urgency for bigger companies to have a better connection with other companies.  Thus, a proposal seconding the resource dependency theory is the exterior linkage owing to rising environmental concern, which forecasts a connection between doubt, or atmospherical reliance, and board structure as assessed by the percentage of external directors and also the scope of the board (Hillman, Cannella,&Paetzols 2000).

  • Board Accountability

Board committees need to be responsible to stockholders through the supervising channels, which is created to secure the liking of investors (Jensen &Meckling, 1976).  This is backed by the agency theory described before in this research.  Agency theory was also backed by the governance improvers like Cadbury (1992), who outlined the significance of determining the board’s responsibility by hiring board committees composed of the stocktaking, compensation, and nomination committees for supervising the financial detailing procedure and enhancing the process by which external leaders are chosen and rewarded.  These suggestions were integrated into the cipher of most effective practice on corporate governance in Rwanda.

Lastly, the outcomes of this research and the literature review that great corporate governance is an essential feature.  Many business setbacks are owing to the board’s incapability to tackle the entire organizations’ effectiveness in an efficient way.  The purpose of this lies in the framework of the board, which includes the self-reliance of directors, formal assessment of the directors, and their training, but especially in connection to the framework of the choice-making procedure that demands to be rehabilitated to allow corporations to concentrate on preserving high functionality in the aspect of a fast transforming setting (Cutting &Kouzmin, 2000).

Thus, governance components ought to be developed to enhance the worth of supervising of board selections (Laing & Weir, 1999).  It can also be asserted that organizations that have integrated useful governance operations comprising of the board components proposed in the cipher of best practice in Rwanda, like the banks, have probably implemented techniques that will result in the durable longevity of the organizations.

Contribution to Research

The World Bank (2000), as well as Rwegasira (2000), indicated that the developing literature on corporate governance concentrates mostly on designed countries.  This study has added to the system of knowledge by offering ideas into corporate governance techniques in the particular circumstances of Rwanda, an upcoming nation in change.

In this study, components of corporate governance have been recognized from the basic literature and challenged with the precise Rwandan circumstance to figure out all those that are efficient in motivating administrators to take full advantage of investor success.  This study reinforces the theoretic basis of the rising literature on corporate governance practices in unindustrialized nations, which identifies that this occurrence is various in these situations than in developed nations (Claessens, 2004; Berglof&Claessens, 2004;Lin, 2000), by indicating the constraints of a significant number of strategies in the perspective of Rwanda.

The study has identified those strategies that presently identify efficient corporate governance in Rwanda, and they were explored and defined.  It was discovered that ownership structure is an essential determining factor of corporate governance in Rwanda and this facilitates the perspective in the rising literature on corporate governance in developing nations, in which it is suggested that this is the most significant process (Berglof&Claessens, 2004).

A clarification of a suitable explanatory model for effective corporate governance in Rwanda, as an emerging nation, has been made.  Considering that most developing nations share a number of attributes, such as inadequate legalized and supervisory frameworks and underdeveloped investment capital markets, the design formulated in this study could be examined in another developing nation (Cohen, 2013; Mwika, 2012; Xavier, 2010).

Recommendations for Further Research

In Rwanda, the business enterprise environment is taken over by the private industry.  The results of this research show the advantages of using excellent governance practices.  For that reason, this research has considerable significances for the corporate industry, policy makers, investors, government, international agencies, and shareholders, owing to the significance of the corporate achievement to the economic system of the country.

This research has employed a case study strategy concentrating on seven large companies in Rwanda.  The outcomes outlined general concerns that, to a specific extent, are also appropriate for other large organizations in Rwanda.  Further investigation with research centered on a survey, predominantly with respect to SMEs, will offer a more powerful base for generalization around a vast variety of organizations in Rwanda.

The works reviewed in Chapter 2 and the researcher results from this study, presented in Chapter 4, indicate the need for additional study in the areas below:

  1. The study could be undertaken to get understanding about the voluntary commitment of organizations to put into practice corporate governance procedures if any, and for organizations to embrace and put into practice the suggested practices of corporate governance in Rwanda.
  2. The OCED concepts for operational corporate governance mentioned in chapter two can be used as a platform for the detailed explanation and evaluation of corporate governance to additional have an understanding of the reputation of the numerous elements of this platform as applied to Rwanda.
  3. There could be research on the evaluation of corporate governance of organizations in Rwanda as well as other East African nations.
  4. Replication of this research for validation reasons is suggested.
  5. Research using larger sized population samples would be effective.
  6. Lastly, replication of the current research by utilizing a survey study method would reduce additional light on problems associated with corporate governance in Africa/Rwanda.


This ending chapter has reviewed corporate governance in large Rwandan companies, which results in the main argument of the research. Practices should be set inside the significant corporate governance points of view.  In such a manner, the viability of corporate governance was evaluated in connection to its practical goal in the Rwandan setting.  Theme 2 on the constitution of the board and Theme 3 on the adequacy of the boarding establishment, operations, and accountability were regarded as significant for effective corporate governance in unpredictable environs.  It was discovered that panel components ended in responsibility to investors, which was regarded as essential for investors and worldwide financing agencies in the present environment.  Board structures also lead to the responsibility to other stockholders.  The research also talked about the suitability of the methodology and the theoretical structure.  It was recommended that imminent study should be maintained with a greater model.

Lastly, the findings highlighted the important role of the shareholders and the stewardship expectations of the board. The study provided evidence, especially in the banking sector, that companies that have implemented corporate governance structures have performed sustainability over a long period of time. Rwanda can be an example of how corporate governance can positively impact on company performance and the country at large. This current research joins a pool of knowledge on corporate governance on the practices of large companies in Rwanda. It has aligned largely with the theoretical perspectives discussed in Chapter 2. The suggestions for future study were provided and should be focused on the socio-economic growth of the state, which will have an effect on profit and stock marketplace overall fulfillment in the long run.


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