Corporate governance practices and performance of consumer cooperative societies in Addis Ababa, Ethiopia

Abstract

The objective of the study is to describe the governance practices and challenges of the consumer’s cooperative societies and examine whether governance has significant impact on the performance of the cooperatives in Addis Ababa City. The study considered various corporate governance components such as board size, board members educational qualification, and gender diversity, as well as the frequency of board meeting. It adopted a quantitative research approach and analyzed data using multiple linear regression function. The findings of the study indicated that the principles of corporate governance were adequately considered in the governance of the consumer’s cooperatives under investigation. The study identified lack of commitment and leadership of board of directors; shortage of supplies of goods and services and incompetent audit committees of the consumer cooperatives as challenges that the consumer’s cooperatives facing. The finding also indicated that all the dimensions of corporate governance such as educational qualification of board members, board size, gender diversity of board members and meeting frequency have significant impact on the performance of consumer’s cooperatives. Based on the result of the study it is recommended that a separate cooperative governance code should be developed. The board of directors and the members should be trained to improve the performance of the cooperatives and a policy should be designed to encourage the participation of females in the board.