Assessment On The Application Of Corporate Governance Practices In The Ethiopian Private Commercial Banks: The Case of Dashen Bank S.C.

Abstract

In most countries management of corporations are legally responsible to shareholders. Vives Xavier (2000) pointed out that in practice management does not pursue the interest of shareholders instead they pursue their own interests which resulted in waste and inefficiency. Corporate governance systems are therefore useful to set internal regulations that are in accordance with applicable law and exercising the corporate autonomy protected by such law, ensure the best accomplishment of the purpose of the Company as a large international company operating under widely differing economic and social conditions, as well as the fulfillment of the corporate interest, which is understood as the common interest of all shareholders of an independent company oriented towards the sustainable development of its corporate object and the creation of long-term value, with a significant institutional and retail shareholder base.( IBERDROLA. 2015) This study was conducted to assess the extent to which corporate governance principles are applied in the Dashen Bank. A descriptive case study was employed to achieve the goal of this research. Four of the board members and twenty six senior managers which are a total of 30 participants were involved in the study. In order to get relevant data from the target population questionnaire and interviews were used. The questionnaire was administered to the board members and senior manager. The data collected through questionnaire were analyzed using frequency and percentage values and the qualitative data were analyzed using textual explanations. Furthermore, the qualitative data (data from interview) were analyzed together with the quantitative one to triangulate the results found from the questionnaire. The findings generally indicate that the extent of the application of the corporate governance principles in Dashen Bank is encouraging even though the bank has still a problem with regard to sufficient time of the board, concerning disclosure of material information on the website, independency of the risk committee and minority shareholders voting rights. As a result, the study presented some possible recommendations so as to alleviate the problems. These include, ensuring board members are full time employees, disclosure of information‟s in the website on timely fashion, making the risk committee independent and so on.