The Impact of Board Characteristics on the Financial Performance of Tanzanian Firms
Loading...
Date
2018-03-31
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Emerald Publishing Limited
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.
Description
Keywords
Financial performance, Corporate governance, Board of directors, Tanzania, Board characteristics, Listed firms