The Effects of Board Structure on Corporate Performance: Evidence from East African Frontier Markets

Research in International Business and Finance, Forthcoming

DOI: 10.1016/j.ribaf.2020.101222

44 Pages Posted: 25 Sep 2020

See all articles by Yilmaz Guney

Yilmaz Guney

Coventry University

Ahmet Karpuz

Loughborough University - School of Business and Economics

Gabriel Komba

Mzumbe University, School of Business

Date Written: May 3, 2020

Abstract

The effectiveness of the well-known corporate governance practices may not be universal due to fundamental differences in the environments under which firms operate. By using hand-collected data from all the non-financial firms listed on the unexplored East African frontier markets (i.e., Kenya, Tanzania and Uganda), we examine the effect of board characteristics on the performance of firms. Our results show that board size has a negative and significant effect on firm performance. The presences of foreigners and civil servants on the board play positive roles on financial performance, where the agency and resource dependence theories apply. Further, we find that board members with higher education also contribute to firm performance. These findings still hold when we consider the 2008-2009 financial crisis period. Overall, we show that in a business climate where ownership is largely dominated by few shareholders, the conventional governance mechanisms do not work effectively.

Keywords: Corporate Governance; Board Attributes; Frontier Markets; Agency Theory; Resource Dependence Theory

JEL Classification: G32; G34

Suggested Citation

Guney, Yilmaz and Karpuz, Ahmet and Komba, Gabriel, The Effects of Board Structure on Corporate Performance: Evidence from East African Frontier Markets (May 3, 2020). Research in International Business and Finance, Forthcoming, DOI: 10.1016/j.ribaf.2020.101222, Available at SSRN: https://ssrn.com/abstract=3592076 or http://dx.doi.org/10.2139/ssrn.3592076

Yilmaz Guney (Contact Author)

Coventry University ( email )

Coventry, CV1 5FB
United Kingdom

Ahmet Karpuz

Loughborough University - School of Business and Economics ( email )

Epinal Way
Leics LE11 3TU
Leicestershire
United Kingdom

Gabriel Komba

Mzumbe University, School of Business ( email )

P.O.Box 6, Mzumbe
Morogoro
Tanzania

HOME PAGE: http://www.mzumbe.ac.tz

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