The effects of corporate governance on financial performance of selected companies listed at the Lusaka securities exchange

Abstract

This study examines the influence of corporate governance on the financial performance of companies that are publicly traded on the Lusaka Stock Exchange (LuSE). The study uses a sample of eight corporations to examine the correlation and regression analysis of three key governance features: board independence, board size, and audit committees. The study aims to investigate the relationship between these aspects and financial outcomes. The study reveals a direct association between the size of the board and revenue, indicating that larger boards may enhance financial performance by bringing in a wider range of experience and implementing improved governance methods. Nevertheless, there is a clear inverse relationship between board independence and revenue, suggesting that greater levels of independence may not necessarily be associated with improved financial performance, potentially due to an excessive focus on risk mitigation. The existence of audit committees is directly associated with revenue, highlighting their significance in enhancing financial transparency and adherence to regulations. This study adds to the discussion on corporate governance in developing economies by emphasizing the subtle impacts of governance frameworks on financial outcomes. It implies that although some governance methods are advantageous, their effects can differ based on the particular circumstances and dynamics of the companies and marketplaces in which they function.