The Influence of Board Characteristics on the Performance of State Owned Enterprises

Abstract

The study seeks to ascertain if there is any relationship between performance of state-owned enterprises (SOEs) and board characteristics. Three proxiesor characteristics of the board, including board independence, board gender diversity and board size as vices of corporate governance are used to find their effects on the performance. The performance of the sampled firm X was measured by ROA, an accounting-based measure. The study reviews literature on board characteristics linking it mainly to the Agency Theory underpinning the study. The quantitative research approach is used to find the relationship between independent and dependent variables with a case study as a design. The sample of the study was drawn from the selected organisation and its subsidiaries using stratified random sampling. The sample consists of members from directors and senior management. The data collected through questionnaires was entered into IBM SPSS software for analysis. SPSS, Pearson correlation analysis and multiple regression were conducted to examine the relationships between the variables under study. Both the correlation and regression results reveal a significant positive relationship between board independence, gender diversity and firm performance in Zimbabwean SOEs. On the contrary, a significant negative relationship was found between board size and firm performance. The study recommends establishing boards dominated by independent non-executive directors and embarking on gender streamlining to achieve improved performance. Similar studies that could be useful in covering a large number of companies are recommended.