Capital market code of corporate Governance and the financial performance of listed companies in Rwanda

Abstract

This research examined the influence of corporate governance codes on the financial performance of publicly traded companies in Rwanda. The objectives included emphasizing the significance of these governance codes for institutional investors and the Rwandan capital market, evaluating the financial performance of BK Plc, and investigating the link between corporate governance and financial performance. Employing a correlational research design, the study utilized quantitative methods for data collection and analysis. The sample included companies listed on the Rwanda Stock Exchange (RSE) such as Bralirwa, Bank of Kigali, I&M Bank, Equity, Cimerwa, KCB, MTN Rwanda, and National Media, chosen through random sampling. Data was collected via questionnaires and document reviews, and analyzed through frequencies, means, standard deviations, and multiple regression to identify relationships between variables. The findings highlighted the importance of corporate governance codes for institutional investors and the capital market, promoting transparency, accountability, protecting investor interests, fostering long-term value creation, managing risks, reducing conflicts between management and shareholders, and enhancing market efficiency and confidence. BK Plc exhibited robust financial performance from 2020-2022, with a correlation coefficient (R) of 0.982, indicating a strong positive correlation between corporate governance codes and the financial performance of listed companies in Rwanda. The adjusted R Square value of 0.826 revealed that 82.6% of the variance in financial performance could be attributed to the implementation of corporate governance codes, with the remaining 17.4% explained by other factors not included in the model. The study concluded that corporate governance codes significantly affect the financial performance of listed companies in Rwanda. It recommended that Rwanda's capital market should enforce robust corporate governance practices to build investor confidence, reduce risks, and promote sustainable business practices, thereby enhancing financial performance and ensuring the long-term success of listed companies.