Goal clarity on the relationship between government ownership and financial performance of the listed companies in Kenya and Tanzania

Musa P. Ngilisho, Neema G. Mori and Ernest G. Kitindi

Cogent Business & Management, 2022, vol. 9, issue 1, 2144701

Abstract: This study investigates the moderating effect of company goal clarity on the relationship between government ownership and financial performance of the listed companies in Kenya and Tanzania. The results show that government ownership holds an average of 6% of the ownership stakes and a maximum of 74% in the selected listed companies. Furthermore, it is found that, listed companies that engage in goal-setting, pursue an average of 5 company goals concurrently, and a maximum of 13. Moreover, government ownership is found to be negatively related to financial performance, while a decrease in company goal clarity is both positively and negatively related to financial performance, for the Tobin’s q and the risk-adjusted ROA models, respectively. The implication is that, as government ownership in emerging economies is endowed with relatively more skills and resources compared to other owners in listed companies, it can effectively pursue a relatively higher number of company goals. The results also suggest that a decrease in goal clarity has a negative moderating effect on the relationship between government ownership and financial performance, whereby the moderating effect reduces the magnitude of the negative effects of government ownership on financial performance, up to an optimal point of seven company goals. The decrease of company goal clarity, which mainly emanates from the concurrent pursuit of all company goals plus the social welfare ones, reduces the negative effects of the ownership on financial performances, contrary to the assertions made in the goal-setting theory.

Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/23311975.2022.2144701 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:oabmxx:v:9:y:2022:i:1:p:2144701

Ordering information: This journal article can be ordered from
http://cogentoa.tandfonline.com/journal/OABM20

DOI: 10.1080/23311975.2022.2144701

Access Statistics for this article

Cogent Business & Management is currently edited by Len Tiu Wright and Tahir Nisar

More articles in Cogent Business & Management from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().