The effects of board structure on corporate performance: Evidence from East African frontier markets

Guney, Yilmaz; Karpuz, Ahmet; Komba, Gabriel

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.

Citation

Guney, Y., Karpuz, A., & Komba, G. (2020). The effects of board structure on corporate performance: Evidence from East African frontier markets. Research in international business and finance, 53, 101222. https://doi.org/10.1016/j.ribaf.2020.101222

• Journal Article Type: Article
• Acceptance Date: Mar 8, 2020
• Online Publication Date: Apr 30, 2020
• Publication Date: 2020-10
• Deposit Date: May 4, 2020
• Publicly Available Date: Oct 31, 2021
• Journal: Research in International Business and Finance
• Print ISSN: 0275-5319
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 53
• Pages: 101222
• DOI: https://doi.org/10.1016/j.ribaf.2020.101222
• Keywords: Corporate governance; Board attributes; Frontier markets; Agency theory; Resource dependence theory
• Public URL: https://hull-repository.worktribe.com/output/3503116
• Publisher URL: https://www.sciencedirect.com/science/article/abs/pii/S0275531919305033?via%3Dihub
• Additional Information: This article is maintained by: Elsevier; Article Title: The effects of board structure on corporate performance: Evidence from East African frontier markets; Journal Title: Research in International Business and Finance; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.ribaf.2020.101222; Content Type: article; Copyright: © 2020 Elsevier B.V. All rights reserved.