English

Hrichi Yosr,Bouaine Wided

doi:10.5897/jat2020.0432

Abstract

This paper investigates the impact of directors’ political experience, acquired on the financial performance of listed companies, after the Tunisian revolution of 2011. We also emphasize the directors’ strategic experience, and the board of directors’ demographic and structural characteristics.  Our data are based on a sample of 22 Tunisian companies listed on the Tunisian stock exchange during the period 2012 to 2018. This period is characterized by a high corruption. We use two different regression models to examine the impact of the directors’ political experience on the firm’s performance. Especially, two measures of the financial performance, namely the ROE and the Tobin’s Q are considered. The results show that political experience is insignificant when considering the ROE while it has a negative impact on performance when it is measured by the Tobin’s Q. Nevertheless, strategic experience, the presence of women and the frequency of meetings moderate this negative impact and increase performance.   Key words: Political experience, performance, Tunisian revolution, board of directors, corruption.

Highlights

Ho (2005) defines corporate governance as the structure and processes involving the board of directors, shareholders, top management and other stakeholders; it involves the roles of the stewardship process, exercising strategic leadership, and the objectives of assuring accountability and improving performance
Using a sample of 22 Tunisian companies listed on the Tunisian stock exchange during the period 2012-2016, we find that the political experience has a negative impact on performance measured by the Tobin’s Q, in a Tunisian context characterized by high corruption
We can conclude that in a context with a high level of corruption, the political experience has a negative impact on performance

Summary

Introduction

Ho (2005) defines corporate governance as the structure and processes involving the board of directors, shareholders, top management and other stakeholders; it involves the roles of the stewardship process, exercising strategic leadership, and the objectives of assuring accountability and improving performance. Relevant corporate governance studies consider the board of directors as a decision-making group that improve the effectiveness of shareholders’ control (Van den Berghe and Levrau, 2004). The board of directors is one of internal governance mechanisms that are intended to ensure a good decision making. The good functioning of the board relies on many classical characteristics related specially to its size, the separation of its function, the independence of its directors and the meeting frequency (Fernandez et al, 2014).

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Conclusion