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

Modest P. Assenga, Doaa Aly, Khaled Hussainey

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    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.
    Original languageEnglish
    JournalCorporate Governance: The International Journal of Business in Society
    Early online date30 Apr 2018
    Publication statusEarly online - 30 Apr 2018


    • corporate governance
    • board of director
    • board characteristics
    • firm performance
    • Tanzania


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