How do board characteristics influence business performance? Evidence from non-life insurance firms in Zimbabwe

Abstract

The purpose of this study was to contribute to the corporate governance literature by establishing the relationship between board characteristics and corporate performance within the nonlife insurance firms in Zimbabwe. The study sought to provide some insights on corporate governance since the phenomenon is relatively an emerging discipline in Zimbabwe. The paper sought to complement other corporate governance studies that were conducted in other environments by producing evidence on the phenomenon from a developing country context. A quantitative research approach was adopted and respondents were selected through a stratified random sampling. The results of the study confirm that board characteristics (board composition, diversity, and size) exhibit a statistically significant positive predictive relationship with the performance of non-life insurance firms measured by gross premium written and customer retention. However, CEO/Chairman duality showed a negative relationship with business performance. Non-life insurance companies need to be cognizant of board characteristics in order to improve their performance. Moreover , the findings in this research has practical relevance for the selection process of directors as it highlights the importance of having a sizeable number of board members as well as an appropriate mix of competences and qualifications on the board. Although corporate governance is has been extensively researched, there is limited study in this area from a developing country like Zimbabwe with relatively less developed capital markets. It would be wrong to assume that the findings found in other countries can apply here because the conditions are different.