School of Mechanical and Industrial Engineering,

Dire Dawa Institute of Technology

CORPORATIVE GOVERNANCE AND FIRM PERFORMANCE: A CASE OF DIRE DAWA
FOOD COMPLEX SHARE COMPANY

Department: production Engineering and management

(PG)
Term paper of corporative governance
Title: CORPORATIVE GOVERNANCE AND FIRM PERFORMANCE: A CASE OF DIRE
DAWA FOOD COMPLEX SHARE COMPANY

Name: Mahadi Mohammed

ID No. DDU1300801

Submitted to: Dr. Yitagesu (PhD)

Submission date: 12/29/2021

Abstract
The Purpose of This study aims to examine the impact of corporate governance on firm performance for
a Dire dawa food complex share company.
This empirical analysis focuses on a Dire Dawa food complex share company covering 80 respondents
from the company workers and surrounding peoples. Several alternative specifications and estimation
techniques are used for analysis purposes.
On one side, the findings indicate that larger boards are associated with a greater depth of intellectual
knowledge, which in turn helps in improving decision-making and enhancing the performance.
The outcomes of the analyses advocated that companies that comply with good corporate governance
practices can expect to achieve higher accounting and market performance. It implies that good
corporate governance practices lead to reduced agency costs.
Key words: corporative management, firm performance, firm in corporate management

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Acknowledgement
First of all, I would like to thanks to the creator of heaven and earth. Next, to Jesus I would like

to thanks to Dr. Yitagasu (ass. Professor) how’s help me by giving time to finalize this
semester term paper give this semester term paper and teaching me all requirement of developing
corporate governance and firm performance and analysis of the result. The last not least thanks
to all of my friend, teachers, Dire Dawa university staff and supporting staff who directly or
indirectly stand with me.

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Table of Contents
Abstract............................................................................................................................................ii

Acknowledgement..........................................................................................................................iii

List of figures..................................................................................................................................vi

List of tables....................................................................................................................................vi

CHAPTER 1....................................................................................................................................1

1 INTRODUCTION...................................................................................................................1

1.1 Introduction of Dire Dawa Food Complex share company..............................................1

1.1.1 MANDATE ANALYSIS.......................................................................................1

1.1.2 OBJECTIVES IN GENERAL OF THE COMPANYN........................................2

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1.1.3 MAJOR PRODUCTS OF THE COMPANY............................................................2

1.2 CORPORATE GOVERNANCE......................................................................................2

1.3 FIRM PERFORMANCE..................................................................................................4

1.4 SIGNIFICANCE OF THE STUDY..................................................................................6

1.5 OBJECTIVES OF THE STUDY......................................................................................6

1.5.1 General objective.......................................................................................................6

1.5.2 Specific objective.......................................................................................................6

1.6 SCOPE & LIMITATIONS...............................................................................................6

Chapter 2..........................................................................................................................................7

2 REVIEW OF LITERATURE..................................................................................................7

2.1 GENESIS OF CORPORATE GOVERNANCE...............................................................7

2.2 DIFFERENT COMMITTEE’S RECOMMENDATIONS...............................................7

2.3 CORPORATE GOVERNANCE AND FIRM PERFORMANCE...................................8

2.4 GLOBAL CONTEXT OF CORPORATE GOVERNANCE DEVELOPMENT.............9

2.4.1 Ethiopian Development Context................................................................................9

2.4.2 Corporate Governance, Netherland:........................................................................10

2.4.3 The Swedish Code on Corporate Governance:........................................................10

2.4.4 Corporate Governance, Canada:..............................................................................10

2.4.5 Corporate Governance Code, Norwegian:...............................................................10

2.4.6 Corporate Governance Code, UK:...........................................................................11

2.4.7 Corporate Governance, New Zealand:....................................................................11

2.4.8 Corporate Governance Code, German:....................................................................12

2.4.9 Corporate Governance Code, Japan:.......................................................................12

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CHAPTER 3..................................................................................................................................13

3 METHODOLOGY OF THE STUDY...................................................................................13

3.1 Data collection................................................................................................................13

3.1.1 Primary Data collection...........................................................................................13

3.1.2 Secondary Data collection.......................................................................................13

3.2 Sample size.....................................................................................................................13

3.3 the objective of this study...............................................................................................14

CHAPTER 4..................................................................................................................................15

4 DATA ANALYSIS AND INTERPRETATION...................................................................15

4.1.1 Analysis and interpretation......................................................................................18

CHAPTER 5..................................................................................................................................20

5 CONCLUSION AND RECOMMENDATION....................................................................20

5.1 Conclusion......................................................................................................................20

5.2 Recommendation............................................................................................................21

References......................................................................................................................................22

List of figures
Figure 1 Dire Dawa Food Complex S. Co. organizational structure...............................................1
Figure 2 Stakeholder Model of the Firm..........................................................................................4
Figure 3 stakeholders’ interest into account chart.........................................................................17
Figure 4 Social responsibility measures chart...............................................................................18
Figure 5 management performance...............................................................................................19
Figure 6 market values chart..........................................................................................................20

List of tables
Table 1 stakeholders’ interest into account....................................................................................16

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Table 2 Social responsibility measures perspective.......................................................................17
Table 3 management performance.................................................................................................19
Table 4 market values....................................................................................................................20

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CHAPTER 1
1 INTRODUCTION
1.1 Introduction of Dire Dawa Food Complex share company
Dire Dawa Food Complex S. Co. is located in Dire Dawa town in the eastern part of the country
which is around 515 kms from Addis Ababa.   The company started its operation in 1995 GC
and it is one of the most modern food processing plants in East Africa.
The company had played a leading role in the food processing industry of Ethiopia with respect
to introducing new system of production and packaging as well as being the pioneer in having
international systems certificates like FSMS (Food Safety Management System) and ISO
22000:2005 ISO 14001:2004 (Environmental Management System) certification.
The Company’s high quality standard products have won good reputation among consumers all
over the country.

Figure 1 Dire Dawa Food Complex S. Co. organizational structure

1.1.1 MANDATE ANALYSIS

 Based on the given government proclamations and regulations, execute the day-to-day
activity of the company.

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 To operate according to the systems and strategic plan to achieve the set goal.
 To obtain approvals for decisions which are beyond the scope of the company
 To manage and mobilize efficiently the human & financial resource for the best
performance of the company.
 To give prompt decisions based on the market conditions in order to increase market
share and stay strong competitor.
 
1.1.2 OBJECTIVES IN GENERAL OF THE COMPANYN

 The objective of the company is to produce & sell flour & flour related products
profitably.
 The company has already been playing the role of substituting imports and this will be
kept in the planning year.
 The company strives to produce quality products and keep its reputation by maintaining
the implemented management systems.
 The company tries to stabilize the food price escalation by distributing products to the
government institutes, market corporatizes and to the public at large with reasonable
price.
1.1.3 MAJOR PRODUCTS OF THE COMPANY

 Wheat Flour
 Vera Spaghetti
 Vera Macaroni(Various Shapes)
 Vera Pastini
 High Energy Zebib Biscuit
 Fruity Biscuit
 Bread
 Animal Feed (Fine bran , Course bran , Grinded Shriveled )
1.2 CORPORATE GOVERNANCE
Corporate governance is most discussed topic in the present corporate world and its economic
systems. Corporate Governance is a dynamic word in all world over.

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(CadburyCommittee, (2002). )provided a clear-cut definition of corporate governance i.e.,
corporate governance is such type of system through which the key personnel of corporate can
be controlled and directed. It has mentioned such types of systems where the consciousness of
different personnel increased within companies. Due to development of socio-economic
structure, the body of management, and other ethical parts, the significant of corporate
governance is increasing in every business world. However, there is no well-established
explanation of corporate governance. From different definitions, the study found that the system
of corporate governance should provide some directions and controlling mechanisms through
which the business entities have directed and controlled. Its structure focused on the distribution
of rights and responsibilities among different participants in the companies, such as; the Board,
managers, key personnel and stakeholders, besides, the rules and procedures for making
decisions on corporate affairs. The term corporate governance will provide a well balancing
system between economic and social goals of an organization. It establishes such framework
through which it can efficiently utilise of its resources.
A proper executive of corporate governance practices will ensure a well establish relationship
among stakeholders and company and in this way.
(OECD, (2004). )emphasized a special attention regarding rights, responsibilities, obligations,
and provided such principles through which an organization runs smoothly. Therefore, in this
way, the confidence level will hike in the mind of investors and they can capture a major portion
of the growth of a country. SEBI provided a guideline for the protection of shareholders’
interests, i.e., clause 49 of the listing agreement, which covers the disclosure mechanism of the
Board of Directors, the formation of different corporate governance Committees, disclosures,
CEO/CFO certification, whistle blower policy etc. (Goel, (2016).)
If each company will follow this, then they can gain a good image from investors. Therefore, it
will make our attention that good corporate governance mechanisms will correlate with proper
disclosure norms. It is important to establish integrated relationships between the various
stakeholders, like managers, Board of Directors, employees, rules providing authorities, different
banks & financial institutions, different types of shareholders including minority shareholders
and the society as a whole.
Major failures have occurred in Ethiopia due to lack of proper and consistent application of
corporate governance practices. Major expectations from the side of shareholders depend on

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transparency and disclosure norms of corporate governance. A developing economy like
Ethiopian economy needs to support a well- established Corporate Governance, which will make
a good and clean socio-cultural corporate environment.

1.3 FIRM PERFORMANCE

Successful firms represent a key ingredient for developing nations. Many economists consider
them similar to an engine in determining their economic, social, and political development. To
survive in a competitive business environment, every firm should operate in conditions of
performance. Nowadays, firm performance has become a relevant concept in strategic
management research and is frequently used as a dependent variable. Although it is a very
common notion in the academic literature, there is hardly a consensus about its definition and
measurement. However, due to the absence of any operational definition of firm performance
upon which the majority of scholars consent, there would naturally be diverse interpretations
suggested by various people according to their personal perceptions.

Governme Investor
nt Political groups

Suppliers
FIRM customers

Trade
association Communities
Employees

Figure 2 Stakeholder Model of the Firm

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CORPORATIVE GOVERNANCE AND FIRM PERFORMANCE: A CASE OF DIRE DAWA
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Performance of company is increased if the following parameter of corporate performance

measures are satisfied:
A. Social responsibility measures
 Low prices for local weavers
 Local citizens employed
 Public festivals sponsored
 Labor procurement regulations followed
 Realistic class for students
 Internship placement for students
B. Organizational effectiveness/operational measures
 Power usage
 Sales volume (yarn in kilograms, cloth in meters, etc.)
 Efficiency
C. Human resource measure
 Metrics such as turnover, recruitment, return on human resources, and costs per
employee are used to assess the importance and efficacy of HR programs.
D. Financial and market measures
 Benefit after taxes, Investment return, financial willingness to pay taxes and loans,
Increased market share
E. Customer service measures
 Customer loyalty
 Additional services for consumers who purchase the items
 Quality of shipped goods
 Delivery performance and lead time for example, transportation services, free
product testing for industries, and payment time delays.
Innovation and learning measures
 Product and service spectrum

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 Degree of buyer-supplier relationship
 Forecasting precision
1.4 SIGNIFICANCE OF THE STUDY
Corporate governance issue is an inheriting problem of most of the Ethiopian companies. Day by
day the framework of corporate governance is changing gradually in Ethiopia but the compliance
part reflects a low performance. Many companies are being collapsed in Ethiopian. It has been
observed that the shareholders are losing their expectations due to lack of proper utilization of
funds and time to time services from many Ethiopian companies. To enrich the expectations
from the side of investors, it is necessary to provide proper guidelines of investment mechanisms
in the light of corporate governance. So, a detail study of corporate governance system has been
carried out
1.5 OBJECTIVES OF THE STUDY
1.5.1 General objective
The general objective of this paper is to study corporate governance and firm performance of
Dire Dawa Food Complex S. Co. share company.
1.5.2 Specific objective

 To investigate whether the firms under the study are adhering to the set of rules
 To measure the firms’ performance in Dire Dawa Food Complex S. Co. share company.
 To examine the impact of corporate governance on firms’ performance in Dire dawa food
complex and
 To examine the impact of corporate governance on firms’ performance in Dire Dawa
Food Complex S. Co. share company.
1.6 SCOPE & LIMITATIONS
This study covers the basic ideas of corporate governance and firm performance, its scope,
norms followed by Dire Dawa Food Complex S. Co. share company. At present, this study is
very much helpful in the hands of Dire Dawa Food Complex S. Co. share company because the
Government has very much emphasized on the interest of major as well as minor shareholders.
The study covers the responsibility for different key personnel, like, the Directors of a company
regarding the sets of rules, regulations, also accountable and responsible for their duties to
protect the shareholders’ interest in such a manner through which the company can get a long-
term firm value. There are many limitations involved in this study, namely, time constraints

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restrict the scope of the research work, expensive process and concern person and higher
officials may not release all data of corporate governance due to the internal code of company.

Chapter 2
2 REVIEW OF LITERATURE
2.1 GENESIS OF CORPORATE GOVERNANCE
There is a wider history of development of corporate governance. Few of them are discussed
below:
Adam Smith in 1776 in ‘The Wealth of Nations’ made a comment on company management that
the manager of a company must protect the money of general people as if these funds are the
own money of the manager and so he must take care of the management with the help of joint
stock company concept. (Smith, 1776] )
Business hub progress in India from a long period of time and from that period the system of
corporate culture was enacted but nobody was aware about the term corporate governance. So,
the development of corporate governance framework has launched in India in very late stage. In
India, the corporate world followed the system of corporate governance in three-fold basis, like,
The Managing Agency System (1850 - 1955)
The Promoter System (1956- 1991)
The Anglo-American System (1992 and onwards) (Das, 2008:8)
In 1952 one article was published relating to Trusteeship (Gandhism) in ‘Harijan’ newspaper and
the main speech of Gandhiji was that let he has collected a wealth in fair means, then the entire
wealth did not belong to him but one thing always belong to him was livelihood and rest part of
the wealth would be used for the purpose of development and welfare of the community of a
country (Sarukkai, R., Chakrabarthi, S., Flake, G. W., Shivakumar, N., & Ansari, A. M., (2005))

2.2 DIFFERENT COMMITTEE’S RECOMMENDATIONS

In this section the study has discussed different Committee Reports and also observes their
recommendations towards corporate governance in the context of the world as a whole. The
discussion has started with a popular Committee Report in this field i.e., Cadbury Report.

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(a) Cadbury committee on Corporate Governance:
This committee was established on May 1991 and its main focused on the financial aspects of
corporate governance and Code of best practice.
Major recommendations of this committee are as follows
(i) Any Board decision cannot be taken by a single Director.
(ii) Independent means the majority of non-executive Director’s views among all
Directors.
(iii) Remuneration Committee made up entirely or mainly on non- executive Directors
will give remuneration policy of Executives.
(iv) An Audit Committee also be formed at least three non-executive Directors.
(CadburyCommittee, (2002). )
(b) Greenbury Committee:
The Confederation of Business and Industry (CBI) formed a group under the direction of Shri
Richard Greenbury to review the remuneration of Directors. Their valuable recommendations are
as follows-
(i) The compensation committee should be formed on the basis of Independent Directors
only.
(ii) Pay details, policy, bonus, pension, etc. of all Directors should be disclosed in the
report of the compensation committee.
(iii) Up to one year contract and retire by rotation in the hands of executive employment. Executive
pay should be reasonable. ( ( Cadbury, Greenbury and Hampel A review., (1999).)
2.3 CORPORATE GOVERNANCE AND FIRM PERFORMANCE
Maximum studies regarding corporate governance and firm performance, the authors have found
a positive relation between two, but some studies also observed that there is a negative relation
exist between corporate governance and firm performance
The firm performance is definitely increased with the help of proper corporate governance and
maximum firms used separate titles of key personnel (Brickley, (1997). )
The Relationship does not exist between corporate governance and Firm performance. (Park, Y.
W., & Shin, H. H. (2004). , (2004))
(Fich, E. M., & Shivdasani, A. , (2005).)found in their article that the firms with Director stock
option plans have higher market value ratios and profitability and the authors concluded that a

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positive stock market reaction lies when the firms announce stock option plans for their
directors.
The article concluded after studying of qualitative aspects of the Board that have some
contribution to firm value, such as the Directors observation of the role of the Board and its
decision-making technique. In this study, the authors used Tobin’s Q and market capitalization
as dependent variables of firm performance. This study used data from the Prowess database of
(CMIE) on market capitalization and sales basis and also used the simultaneous equations model
of regression (Neeraj Dwivedi, (2005).)
(Lei, (2006).)explained in his paper that it is necessary to improve corporate governance for the
purpose of improvement of the value of the firm. Here the author used corporate governance
score, selected sample on the basis of large cap, mid-cap and small cap and also used market
capitalization. The author classified different companies into related industries
2.4 GLOBAL CONTEXT OF CORPORATE GOVERNANCE DEVELOPMENT
Global context has incorporated as a major literature review about corporate governance and
from here; the study can get different core ideas to develop its research. This review is
presenting of different developed and developing countries corporate governance mechanisms
and codes:
2.4.1 Ethiopian Development Context
Ethiopian economy is at the stage of transformation. Reforms during the last couple of decades
brought market economy, privatization and openings in the financial system to the Ethiopian
economy. Investments and joint ventures with foreign investors are making progress. (Addis
Ababa Chamber of Commerce and Sectorial Associations, 1947)
Basic Principles and Values for Corporate Governance in Ethiopian National Development
Context Corporate Business shall stand on the fundaments of Basic Principles and Values. These
Basic Principles for Ethiopian Business are:
 Respect for Human Rights, Non-Discrimination and Commitment to Peaceful and
Harmonious Development;
 Obligation to the Democratic Values, Institutions and Laws; BR>
 Commitment to Poverty Alleviation and Wealth Creation; BR>
 Care for Environment and the Natural Resources of the Country;

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On these Basic Principles the Business Community of Ethiopia is committed to Basic Values for
Governance of their Corporations and Organizations. These Basic Values are:
 Trustworthiness in all Business Relations;
 Accountability to the Owners, Employees and Creditors;
 Responsibility to Stakeholders and Society;
 Integrity in all Business Undertakings;
 Transparency in Communication and Publication;

2.4.2 Corporate Governance, Netherland:

The main control of the institution goes to Supervisory Board of the company. It formed based
on unrelated supervisory Directors who are free from any relation with the company and
independent. The organisation in this country also formed audit committee, remuneration
committee, compliance committee, risk management committee etc. This Board is responsible to
provide remuneration to the executive supervisory Board of Directors. (("Corporate Governance
Summary of best Practice Guidelines", 2006:2-5) )
2.4.3 The Swedish Code on Corporate Governance:
Here the companies’ shareholders are called shareholders meeting and they are the highest
decision-making body regarding companies. They have to decide the remuneration of Board
members and auditors in their meeting. Different activities of shareholders have done through
nomination committee and this committee selects the chair. The maximum numbers of members
will be independent of company management ((Halvarsson, 2010:13-19). )
2.4.4 Corporate Governance, Canada:
There should be separate corporate governance of FRFIs (Federally- Regulated Financial
Institutions) based on size, ownership formation, nature, volume of activities etc. of the
institutions and it is recognized by OSFI (Office of The Superintendent of Financial Institutions
Canada). The Board structure should be independent from top-level management i.e. senior
management. The Board is responsible to maintain a proper internal control of the institutions.
Every FRFI should form an audit committee based on non-employee Directors and they are not
affiliated (OSFI., (2013).)

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2.4.5 Corporate Governance Code, Norwegian:
The Norwegian Corporate Governance Board (Norwegian Corporate Governance Board, 2014).
7-10)has issued this code in 2012 and provided the following guidelines:
If there will not be any agreement between company and employee regarding selection of the
Board of Directors (when no. of employees is more than 200), then the company will form a
corporate assembly at minimum numbers of members is 12 in the proportion of 2/3, elected by
shareholders and the rest elected by employees. The Main function of this assembly is to choose
the Board members. Remuneration of executive personnel should show as Annexure of Annual
Report (AR) of the company.
In case of public companies act, the Chairman of Board and the corporate assembly must be
present in general meeting of shareholders and others members of the Board should attend. The
members of nomination committee also are present at the meeting. The members of nomination
committee must be excluded chief executive of the company and any other executive personnel
(Norwegian Corporate Governance Board, 2014). 7-10)
2.4.6 Corporate Governance Code, UK:
According to this code, the annual report of the companies should have the following contents:
 Detail of Board operations of the company.
 Disclose the name of the main personnel like CEO, chairperson of the Board of the
company.
 Total number of meeting and attendance detail of the Board members.
 Detail of the name of non-executive members, formation of nomination committee etc.
 Director responsibilities statement, performance evaluation of the company etc. (Council,
September 2014)
2.4.7 Corporate Governance, New Zealand:
In case of formation, Board composition there will be a formal selection process after
considering skills, knowledge, experiences etc. The Board should form a proper balance of
independence, skills, etc. The chairperson is responsible to follow up a charter towards the role
and responsibility of Board members. At the time of formation of an audit committee, major
should be the non-executive person and chairperson will be independent. The organization also
formed a nomination committee, takeover committee, remuneration committee etc.

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In case of executive remuneration, the Board should publish a clear-cut remuneration policy
based on performance, share-based payment etc. All the process should approve by the esteem
shareholders (Parker, (2005). )
2.4.8 Corporate Governance Code, German:
This code framed for the purpose of proper management and proper supervision of the listed
companies in German stock exchange. The Board in this country has two parts, namely, the
Management Board and Supervisory Board. These two Boards have different responsibilities.
General shareholders will select the members of the Supervisory Board and this Board plays an
advisory role (German Corporate Governance Code, ( 2015 ))
2.4.9 Corporate Governance Code, Japan:
This code has some number of principles, like, -
All shareholders must have equal rights and the company always take care about these.
The company always tries to develop a bridge between shareholders and other than shareholders
of the company, like, creditor, employees, partners, customers etc.
The Board of the company should disclose appropriate data towards their interested parties.
The code also provides a clear-cut guideline regarding the responsibilities of the members of the
Board (Tokyo Stock Exchange, (2015).)

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CHAPTER 3
3 METHODOLOGY OF THE STUDY
The wisely exercise of corporative governance is increase the transparence and fairness
between the workers of the company. This increasing of transparence is increasing the
performance of the company. During my study I attempted to survey applicable and available
literature on corporate management, corporate governance and other relevant document of the
company. To overcome my investigation, I collect data from different source. Data is
collected both primary and secondary data

3.1 Data collection

3.1.1 Primary Data collection
to collect this primary data I use both qualitative and quantitative data using research tools such
as experiments, survey questionnaires, interviews and observation. I take data as
a quantitative or statistical form, e.g., charts, graphs, diagrams and tables. Some of data I was
taken is as qualitative, e.g., extracts from the conversations of the company’s worker and all
stockholders of the company.
3.1.2 Secondary Data collection
secondary data collection is the information taken from annual report quarterly report and
monthly report of the company.
Method of data analysis: Excel software

3.2 Sample size

Dire Dawa Food Complex S. Co. factory employees around 500 workers and the stakeholder
and direct beneficiary is around 500000 people around Dire Dawa city. from total population the
amount to be selected for my paper is 30 people from the company workers and 50 from outside
of the company. in generally the population size for my paper is 80 people from the total
population.
To identify the corporative governance and firm performance in different perspective I prepare
the questioner and interviewing each individual in sample space.

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3.3 the objective of this study

 To identify social responsibility measures
 To know Organizational effectiveness/operational measures
 To know Human resource measure
 To know Financial and market measures
 To investigate whether the firms under the study are adhering to the set of rules
 To measure the firms’ performance in Dire Dawa Food Complex S. Co. share company.

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CHAPTER 4
4 DATA ANALYSIS AND INTERPRETATION
under this chapter the analysis of corporate governance and firm performance reporting practice
based on the view of the company and interviewing as well as data gathered from individual
sample space of population by questionaries. the questionnaire survey covers some important
issues of corporate governance and firm performance of Dire Dawa Food Complex S. Co.
factory for different years and the questionnaire response are analyzed as follow:
Table 1 stakeholders’ interest into account

Dimension Year Strong Disagree Uncertain% Agree% Strong

disagree% % agree%

The company 2016 20 30 20 5 5

takes 25% 37.5% 25% 6.25% 6.25%
stakeholders’ 2017 10 20 20 25 5
interest into 12.5% 25% 25% 31.25% 6.25%
account and 2018 15 10 25 30 0
respects 18.75% 12.5% 31.25% 37.5% 0
stakeholders’ 2019 32 18 15 10 5
rights that are 40% 22.5% 18.75% 12.5% 6.25%
established by 2020 5 10 18 32 15
law. 6.25% 12.5% 22.5% 40% 18.75
2021 5 13 37 20 5
6.25% 16.25% 46.25% 25% 6.25%

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stakeholders
35

30

25

20

15

10

21 30 26 30 31 22 Series7
Series8 Series9 Series10 Series11 Series12 Series13

Figure 3 stakeholders’ interest into account chart

Of the 80 respondents, on question the company takes stakeholders’ interest into account and
respects stakeholders’ rights that are established by law in 2016 large percentage of samples are
disagree. In 2017and 2018 year 31.25% and 37.5% respectively sample are agreed. In 2019 the
company stakeholders are strongly disagreed. According to more of respondent during this time
the budget is shifted for transitional government. At 2020 the company come to the good status
in all financial ratio and 40% sample are agreed.
Table 2 Social responsibility measures perspective

Dimension Year Strong Disagre Uncertain Agree% Strong

disagree e% % agree%
%
At what level 2016 6.25% 25% 37.5% 25% 6.25%
organization support
the society throughout 2017 12.5% 18.75% 25% 31.25% 12.5%
Low prices for local 2018 25% 37.5% 25% 12.5% 0%
weavers, Local 2019 40% 22.5% 18.75% 12.5% 6.25%
citizens employed, 2020 8.75% 16.25% 20% 25% 30%
public festivals 2021 1.25% 25% 46.25% 25% 2.5%
sponsored, Internship

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CORPORATIVE GOVERNANCE AND FIRM PERFORMANCE: A CASE OF DIRE DAWA
FOOD COMPLEX SHARE COMPANY
placement for students

Social responsibility
45

40

35

30
Axis Title

25

20

15

10

Figure 4 Social responsibility measures chart

From the year 2016 to 2021 then company contributed for the society around dire dawa and
some eastern part of Ethiopia at different degree. During 2016 the company giving community
service around 37.5% are uncertain. 31.25% agree in the next year 2017 because of the situation
in Ethiopia during 2018 the company is stop community service as all and 2019 the respondents
were strongly disagreed. At this time the company is gradually increase the community service
and 46.25% of sample are uncertain for supporting the society.

Table 3 management performance

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CORPORATIVE GOVERNANCE AND FIRM PERFORMANCE: A CASE OF DIRE DAWA
FOOD COMPLEX SHARE COMPANY
Dimension Criteria Frequency Percentage Cumulative

The management of the company yes 52 65 65

develops individual values, institutional
values and behavioral expectations to No 28 35 100

support the implementation

of goals, strategies and plans
total 80 100
that are established for
appropriate processes.

Frequency

yes
33% No
total
50%

18%

Figure 5 management performance

4.1.1 Analysis and interpretation

Of the 80 respondents 52are agreed on idea the management of the company develops individual
values, institutional values and behavioral expectations to support the
implementation of goals, strategies and plans that are established for appropriate processes and
28 are disagreed on management of company

Table 4 market values

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CORPORATIVE GOVERNANCE AND FIRM PERFORMANCE: A CASE OF DIRE DAWA
FOOD COMPLEX SHARE COMPANY
Dimension year High Medium Low
What is the market 2016 39 21 20
capitalization, price 2017 42 30 8
to book value ratio 2018 23 26 31
and market price 2019 25 30 25
per equity share 2020 33 31 16
2021 38 22 20

market values
45
40
35
30
25
Axis Title

20
15
10
5
0
2016 2017 2018 2019 2020 2021

Figure 6 market values chart

The performance of the company is depended on the political and environmental problem.
As we are seen from the idea of respondent company performance is very low when the
stability of the country is low. Of 80 respondents the percentage of comparison all most
equal during 2018&2019 so, in generally the company performance is depend on the
country situation.

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CORPORATIVE GOVERNANCE AND FIRM PERFORMANCE: A CASE OF DIRE DAWA
FOOD COMPLEX SHARE COMPANY

CHAPTER 5
5 CONCLUSION AND RECOMMENDATION
5.1 Conclusion
Dire Dawa Food Complex S. Co. company is the biggest company which distribute macaroni
pasta and flour for eastern part of Ethiopia. While I visit the company, I face many drawbacks in
the company including the transparence, willingness of the workers to be motivative, disclosure
of the organization, equity distribution of benefit for shareholder, accountability of manager and
stakeholder are not getting more benefit from the company. In different year the company
customer satisfaction, managerial responsibility, market values of the company are varying.
In generally because of political situation in Ethiopia company is loss its profit in terms of
transparence and accountability the worker of the company is solved if the company implement
the correct corporative governance correspondingly the performance of the company is
improved. More of the respondents argue the company to give support to environmental society.

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CORPORATIVE GOVERNANCE AND FIRM PERFORMANCE: A CASE OF DIRE DAWA
FOOD COMPLEX SHARE COMPANY

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