Corporate Boards, Ownership Structure and Firm Performance in an Environment of Severe Political and Economic Crisis

British Journal of Management, 23 (supplement), 2012

Posted: 2 May 2018

See all articles by Musa Mangena

Musa Mangena

University of Nottingham Business School

Venancio Tauringana

Bournemouth University - Accounting and Finance

Eddie Chamisa

University of Cape Town - Department of Finance and Tax

Date Written: March 14, 2012

Abstract

This study examines the relationship between board and ownership structures and firm performance in an environment of severe political and economic crisis. Using panel data from the Zimbabwe Stock Exchange (ZSE) for the period 2000-2005, we split the period into pre-presidential election period (2000-2002) (a relatively stable political and economic period) and post-presidential election period (2003-2005) (a hostile political and economic period) to capture the differences in the political and economic landscape. We find that board size, ownership concentration and executive directors' share ownership increased whilst the proportion of non-executive directors reduced in the post-presidential election period. Employing a system Generalized Method of Moments (GMM) approach, we find that performance is positively related to board size and ownership concentration in the post- (but not in the pre-) presidential election period. The results also show that performance is negatively related to executive directors' share ownership in the post-presidential election period, but positively related in the pre-presidential election period. The proportion of non-executive directors is negative and significant in both periods. These findings support the notion that the effects of board and ownership structures depend on the nature of the firm's environment, and therefore have important implications for policy-makers

Keywords: corporate governance structures; firm performance; political and economic crisis; rule of law and enforcement, political theory

Suggested Citation

Mangena, Musa and Tauringana, Venancio and Chamisa, Edward Elae, Corporate Boards, Ownership Structure and Firm Performance in an Environment of Severe Political and Economic Crisis (March 14, 2012). British Journal of Management, 23 (supplement), 2012, Available at SSRN: https://ssrn.com/abstract=3162584

Musa Mangena (Contact Author)

University of Nottingham Business School ( email )

United Kingdom

Venancio Tauringana

Bournemouth University - Accounting and Finance ( email )

Centre for Corporate Governance and Regulation
Fern Barrow
Poole BH12 5BB, Dorset
United Kingdom

Edward Elae Chamisa

University of Cape Town - Department of Finance and Tax ( email )

Private Bag X3
Rondebosch, 7701
South Africa

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