The analysis of Board Composition and Financial Performance

Kagema, Africar Tonono (2017) The analysis of Board Composition and Financial Performance. Masters thesis, The Open University of Tanzania.

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Abstract

The banks are a dominant component of the Tanzanian Financial System; they are engines of growth of Tanzanian economy. The board of directors, in today corporate, assumed responsibility for devising corporate strategy, evaluating managerial performance, providing strategic direction, putting corporate governance policies in place and ensuring an adequate return for the shareholders. The size and composition of the board of directors constitute of the most essential corporate governance norms. This study made to attempt assessing the performance of listed banks and the relationship with board size, composition of board members, committee meetings, bank age and board meetings. The collapse of major corporations such as Enron, Worldcom and Parmala has stimulated the recent interest in corporate governance and suggest the need for policies to promote the effective, powerful, and balanced board compositions and other aspects of corporate governance. With that in mind, in this study, I would like to answer the following research question: “What is the relationship between board compositions and bank performance, measured by ordinary least square (OLS) on three listed banks at the DSE?” In order to examine if there is a relationship between board composition and financial performance, I have done Descriptive and Multiple Regression analyses. Based on the results I can state that there is little evidence to suggest a linear positive or negative relationship between board composition and bank performance since the results show that the independent variables have negative relationship with return on assets and no significant impact on return on equity. Other results show a positive and negative relationship between independent variables with dependent variables.

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