The Relationship between Board Tenure and Financial Performance. The Allegiance Hypothesis
Journal Title: International Journal of Modern Research In Engineering & Management. - Year 2018, Vol 1, Issue 5
Abstract
PURPOSE: The purpose of this paper was to examine the relationship between the tenure of the board and financial distress of listed firms in Kenya. DESIGN/METHODOLOGY: The research design used in this study was exploratory design. The study employed panel regression analysis and simultaneously used pooled regression and random effects on sample size of 57 listed firms in Kenya during the period of 2007-2016. FINDINGS: The study found that board tenure was found to be negatively and significantly related to financial performance (β=-0.091; p<0.01). THEORETICAL IMPLICATIONS: This study adds value to theory by studying the effect of tenure on financial performance by updating empirical literature from a developing country. ORIGINALITY: The paper fills an important gap in academic literature by providing insights into the role of board tenure in performance of firms particularly in developing economies. In addition, given the increasing collapsing of companies in developing nations, this paper provides policy makers with evidence on the implications of board composition on financial distress.
Authors and Affiliations
Dr. Kennedy B. Mwengei Ombaba
Keywords
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