Abstract:
Purpose – This paper aims to investigate the impact of board characteristics on the financial
performance of listed firms in Tanzania. Board characteristics, including outside directors, board size,
CEO/Chair duality, gender diversity, board skill and foreign directors are addressed in the Tanzanian
context by applying two corporate governance theories, namely, agency theory and resource
dependence theory.
Design/methodology/approach – The paper uses balanced panel data regression analysis on 80
firm-years observations (2006-2013) from annual reports, and semi-structured interviews were
conducted with 12 key stakeholders. The study uses also a mixed methods approach and applies a
convergent parallel design (Creswell and Plano Clark, 2011) to integrate quantitative and qualitative
data.
Findings – It was found that in terms of agency theory, while the findings support the separation of CEO/
Chairperson roles, they do not support outside directors-financial performance linkage. With regard to
resource dependence theory, the findings suggest that gender diversity has a positive impact on
financial performance. Furthermore, the findings do not support an association between financial
performance and board size, PhD qualification and foreign directors.
Practical implications – The study contributes to the understanding of board-performance link and
provides academic evidence to policy makers in Tanzania for current and future governance reforms.
Originality/value – The findings contribute to the literature by providing new and original insights that,
within a developing setting, extend current understanding of the association between corporate
governance and financial performance. This is predicated, also, on the use of uncommon mixed methods
approach.
