The Impact of Corporate Governance on Financial Performance: The Case of Listed Companies in the Consumer Services Sector in Botswana
Journal Title: Advances in Social Sciences Research Journal - Year 2017, Vol 4, Issue 22
Abstract
The concept of corporate governance relates to the procedures and practices that are implemented to run a company in such a way that its objectives are achieved. It is the mechanism and process to control and direct a business enterprise, which would result in appropriate balancing of the varied interests of the stakeholders and that of the organization. This study focused on the effect of corporate governance of listed companies in the consumer services sector in Botswana for the period 2012-2016. Financial statements of the listed consumer services companies were used as the main source of data. Return on Assets was taken as the dependent variable to measure profitability and Board size, gender diversity, male-female representation in the board, composition of executive and non-executive directorship, number of sub-committees and frequency of board meetings as independent variables. The findings indicated significant positive relationships between board size and the number of male board members and between board size and the number of non-executive directors; significant positive relationships between the number of non-executive members and the number of male board members and with the number of sub-committees; between female board representation and gender diversity and between the number of board sub-committee and the frequency of board meetings. Negative significant relationships were identified between male board representation and female board representation and between the number of executives and gender diversity. Return on assets, which measured the performance of the selected companies showed a strong negative relationship with number of sub-committees. Further analysis also revealed a significant impact of the number of subcommittees on the financial performance of the listed companies in the consumer services sector. None of the other independent variables showed any significant impact on the profitability of the selected firms. The study will be useful to the stakeholders to appreciate various dimensions of corporate governance and their influence in the financial performance of business enterprises.
Authors and Affiliations
C. R. Sathyamoorthi, Pritika Baliyan, Mashoko Dzimiri, Lillian Wally-Dima
Keywords
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- EP ID EP330644
- DOI 10.14738/assrj.422.3925.
- Views 174
- Downloads 0
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