The impact of board characteristics on the financial performance of Tanzanian firms

Assenga, Modest and Aly, Doaa A and Hussainey, Khaled (2018) The impact of board characteristics on the financial performance of Tanzanian firms. Corporate Governance: The International Journal of Business in Society. ISSN 1472-0701 (In Press)

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Abstract

Purpose - This study investigates 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, 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. Theoretical and 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.

Item Type: Article
Article Type: Article
Uncontrolled Keywords: Corporate Governance, Board of Directors, Board Characteristics, Firm Performance, Tanzania
Subjects: H Social Sciences > HG Finance
H Social Sciences > HG Finance > HG4001 Finance management. Business finance
Divisions: Schools and Research Institutes > Business School > Accounting and Finance
Research Priority Areas: Applied Business Research
Depositing User: Anne Pengelly
Date Deposited: 06 Apr 2018 09:48
Last Modified: 06 Apr 2018 17:11
URI: http://eprints.glos.ac.uk/id/eprint/5548

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