Corporate Governance Practices and Financial Performance of Firms Listed on the Zimbabwe Stock Exchange

Famba Takuriramunashe, Yusheng Kong, Ophias Kurauone and Grace Chituku-Dzimiro
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Famba Takuriramunashe: School of Finance & Economics, 301 Xuefu Road, Zhenjiang, PRC2 Yusheng Kong, Jiangsu University, School of Finance & Economics, 301 Xuefu Road, Zhenjiang, PRC
Yusheng Kong: School of Finance & Economics, 301 Xuefu Road, Zhenjiang, PRC2 Yusheng Kong, Jiangsu University, School of Finance & Economics, 301 Xuefu Road, Zhenjiang, PRC
Ophias Kurauone: Ophias Kurauone, School of Finance & Economics, 301 Xuefu Road, Zhenjiang, PRC
Grace Chituku-Dzimiro: 4Grace Chituku-Dzimiro, Chinhoyi University of Technology, Department of Accounting & Finance, Chinhoyi, Zimbabwe

International Journal of Research and Scientific Innovation, 2020, vol. 7, issue 9, 195-205

Abstract: Purpose: This study examines how corporate governance practices influence performance of firms listed on the Zimbabwe Stock Exchange. Design/methodology/approach: The fixed effects (FE) model is estimated on a panel of 29 non-financial firms listed on the Zimbabwe Stock Exchange for the period between 2010 and 2016. Firm performance was measured using dependent variables return on assets (ROA) and return on equity (ROE) calculated from the firms’ financial reports available online. The panel data include fixed effects (FE) and random effects (RE) estimators. The Hausman test framework is used to select the most efficient and consistent alternative. Findings: The study finds evidence to support the need for good corporate governance practices in Zimbabwe. Board independence and board gender diversity were found to have a significant positive relationship with ROA. The study further finds a positive significant relationship between board independence, board gender diversity, board size and ROE. Originality/value: Although many previous studies have studied this relationship, the current study is the first to investigate the impact of good corporate governance practices with a specific focus on the Zimbabwe stock exchange.

Date: 2020
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