Corporate Governance and Organizational Financial Performance: A case of Listed Companies on Dar es Salaam Stock Exchange

Abstract

The study looked at the effects of corporate governance on financial performance of companies listed on Dar es Salaam stock exchange. The study chose to investigate the association between corporate governance characteristics; such as board size, board, and audit committee composition, and business financial success, measured by return on assets (ROA) and return on equity (ROE). Thirteen (13) listed firms made up study population, and companies’ financial reports for the years 2010 to 2021 were the source of the quantitative secondary data. E-Views 9 software was used to analyze the data using a linear regression model with dynamic panel data and the Generalized Method of Moments. The results indicated a high correlation between financial performance and the audit committee (ROA & ROE). Similar to this, board size had a beneficial impact on ROA but a negligible impact on ROE. Both financial performance metrics are severely impacted by the composition of the board (ROA & ROE). According to the study findings, both positive and negative effects on financial performance are caused by corporate governance traits (return on assets and return on equity). As a result, the study proposed increased size and composition of the directors in accordance with the level of complexity and operational nature of each of the listed firms.

Keywords: Audit Committee, Board size, Board composition, Firm Financial performance, listed companies in Dar es Salaam Stock Exchange (DSE)