Board Characteristics and Financial Performance in Developing Economies: Evidence from Insurance Companies in Uganda
DOI:
https://doi.org/10.47604/ejbsm.3924Keywords:
Board Characteristics, Insurance Companies, Financial PerformanceAbstract
Purpose: The purpose of this study was to determine the influence of the board characteristics, and financial performance of Insurance companies in Uganda. The board characteristics studied included gender diversity, age diversity, director ownership, education qualification, board size, board independence and board tenure.
Methodology: The research embraced the positivist paradigm and employed a descriptive cross-sectional research design, employing quantitative data. The effective sample had 74.7% response rate. The null hypothesis was set, there is no statistically significant influence of board characteristics on the financial performance of Insurance companies in Uganda and tested using simple linear regression analysis.
Findings: The findings of the study indicate a statistically significant positive influence between board characteristics and financial performance (R = 0.453). The model was overall significant (F = 2.650, p = 0.017). Board Characteristics account for up to 20.5 percent of deviation in financial performance of insurance companies in Uganda. The null hypothesis was rejected. The study provided evidence that board characteristics positively, significantly and statistically influenced financial performance of insurance companies in Uganda. However, only gender diversity had a positive and statistically significant influence on financial performance. The remaining six dimensions of board age, director ownership, board tenure, education qualification, board independence board size were insignificant. Women directors tend to be keen, with regular attendance with arrange of perspectives that enhance performance. It is therefore concluded that board characteristics influence financial performance of insurance companies in Uganda.
Unique Contribution to Theory, Practice and Policy: The study recommends the regulator to develop a policy that shall enhance board gender diversity to a minimum of 45 percent female representation on the board to ensure a stellar financial performance of insurance companies in Uganda. In support of agency theory an increase of women representation on board stand to triple the economic benefits of their companies as they reduce on agency costs related to inefficiencies related to conflict of interest.
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Copyright (c) 2026 Hannington Businge, Prof. Vincent N. Machuki, Prof. Evans Aosa, Prof. James M. Njihia
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