Board characteristics and financial performance of banks listed on frontier stock markets in East Africa. A panel analysis

Magoma, Anthony; Ernest, Enid; Kasheshi, Ernest Article Board characteristics and financial performance of banks listed on frontier stock markets in East Africa. A panel analysis Cogent Business & Management Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Magoma, Anthony; Ernest, Enid; Kasheshi, Ernest (2024) : Board characteristics and financial performance of banks listed on frontier stock markets in East Africa. A panel analysis, Cogent Business & Management, ISSN 2331-1975, Taylor & Francis, Abingdon, Vol. 11, Iss. 1, pp. 1-18, https://doi.org/10.1080/23311975.2024.2400615 This Version is available at: https://hdl.handle.net/10419/326556 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Cogent Business & Management ISSN: 2331-1975 (Online) Journal homepage: www.tandfonline.com/journals/oabm20 Board characteristics and financial performance of banks listed on frontier stock markets in East Africa. A panel analysis Anthony Magoma, Enid Ernest & Ernest Kasheshi To cite this article: Anthony Magoma, Enid Ernest & Ernest Kasheshi (2024) Board characteristics and financial performance of banks listed on frontier stock markets in East Africa. A panel analysis, Cogent Business & Management, 11:1, 2400615, DOI: 10.1080/23311975.2024.2400615 To link to this article: https://doi.org/10.1080/23311975.2024.2400615 © 2024 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group View supplementary material Published online: 12 Sep 2024. Submit your article to this journal Article views: 1640 View related articles View Crossmark data Citing articles: 1 View citing articles Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=oabm20 ACCOUNTING, CORPORATE GOVERNANCE & BUSINESS ETHICS | RESEARCH ARTIClE Cogent Business & ManageMent 2024, VoL. 11, no. 1, 2400615 Board characteristics and financial performance of banks listed on frontier stock markets in East Africa. A panel analysis Anthony Magomaa , Enid Ernestb and Ernest Kasheshia aDepartment of accounting and Finance, tanzania institute of accountancy, Mwanza, tanzania; bDepartment of Procurement and Logistic Management, tanzania institute of accountancy, Mwanza, tanzania ABSTRACT This study investigates the impact of board characteristics on the financial performance of 14 listed banks in Kenya, Tanzania, and Uganda. We use 84 firm-year observations of 14 listed banks from three stock markets in East Africa, namely Dar es Salaam Stock Exchange (DSE), Nairobi Security Exchange (NSE), and Uganda Security Exchange (USE) for a six-year period that is 2017–2022. The accounting measure of financial performance was the net interest margin (NIM). This study used a fixed-effects panel analysis model to test the hypotheses. The empirical results reveal that board financial expertise positively and significantly influences financial performance. This implies that an increase in the proportion of board members with financial and accounting backgrounds increases bank performance. On the other hand, the proportion of foreign directors decreased bank performance as the variable exerted a negative and significant effect on bank performance. The results suggest that board structure has an important role to play in the governance of listed banks in East African frontier stock markets. 1. Introduction The current global financial crisis has necessitated corporate governance in the banking industry to receive greater attention than ever before. This is because bank failures may be associated with poor corporate governance structures, and this might have a disastrous effect on the general public by potentially affecting payment systems, causing liquidity crises, and other macroeconomic problems including contagion risk (Berhe, 2023; liang et al., 2013; Pathan & Faff, 2013). The banking sector’s performance is thought to be a mirror image of the economic status of any country (Magoma etal., 2022; Misra & Aspal, 2013). In this context, the significance of bank performance is widely acknowledged by academicians, practitioners, regulatory bodies, and other key stakeholders in the banking industry (Elgadi & Ghardallou, 2022; Ntim & Soobaroyen, 2013). Thus, a well-performing banking system ensures that shareholders’ interests are met, profits are maximized, and shareholders’ investments are protected and preserved (Kowoon et al., 2022). From this premise, our study aims to explore the relationship between various board attributes and the financial performance of banks listed in East African (EA) frontier stock markets that is Kenya, Uganda, and Tanzania. This study aims to address seven (7) research questions (RQ): RQ1. Do board meetings significantly impact bank financial performance? RQ2. Does board size significantly impact bank performance? RQ3. Does gender diversity significantly impact bank performance? RQ4. Does board financial expertise significantly impact bank performance? RQ5. Does board educational diversity significantly impact bank performance? RQ6. Do independent directors significantly impact bank performance? RQ7. Do foreign directors significantly impact bank performance? Thus, from the research questions the following research © 2024 the author(s). Published by informa uK Limited, trading as taylor & Francis group CONTACT anthony Magoma [email protected] Department of accounting and Finance, tanzania institute of accountancy, P.o Box 5247, Mwanza, tanzania. https://doi.org/10.1080/23311975.2024.2400615 this is an open access article distributed under the terms of the Creative Commons attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. the terms on which this article has been published allow the posting of the accepted Manuscript in a repository by the author(s) or with their consent. ARTICLE HISTORY Received 7 November 2023 Revised 2 August 2024 Accepted 30 August 2024 KEYWORDS Board characteristics; financial performance; agency theory; resource dependency theory SUBJECTS Corporate Governance; Corporate Social Responsibility & Business Ethics; Finance 2 A. MAGOMA ETAl. objectives are adopted by this study. 1. To examine the impact of board meetings on bank performance. 2. To examine the impact of board size bank performance. 3. To examine the impact of gender diversity on bank performance. 4. To examine the impact of board financial expertise on bank performance. 5. To examine the impact of board education diversity on bank performance. 6. To examine the impact of independent directors on bank performance. 7. To examine the impact of foreign directors on bank performance. Consequently, the present study seeks to make the following contributions to the existing literature. First, this study tries to give a more comprehensive representation of the board structure and its effect on the financial performance of banks listed in East Africa’s frontier stock markets. Berhe (2023) pointed out very clearly that a successful board is a prerequisite for an effective banking system. Secondly, the present study uses a panel data analysis that allows variations across different banks and study periods. Thirdly, for the issue of endogeneity in panel data analysis the study utilizes the use of a robust estimation technique namely the Two Stage least Squares (2SlS). This method is commonly used to address the issue of endogeneity in panel data analysis thus ensuring the reliability and validity of the findings. Fourthly, the study uses a multi-theoretical approach by using two different theories namely agency theory (AT) and Resource Dependency theory (RDT). Fifthly, previous empirical studies aimed at assessing the relationship between corporate governance structures and firm performance in East African frontier stock markets. Most of these studies were conducted on listed and non-listed firms and microfinance institutions (Guney et al., 2020; Mori, 2014; Mwambuli, 2016; Okiro & Aduda, 2015). The latter studies did not examine the influence of corporate governance structures on listed bank financial performance in the EA frontier stock markets in Kenya, Uganda, and Tanzania. Due to limited empirical studies on the relationship between corporate governance structures and the financial performance of listed banks in East Africa, this study intends to fill the literature vacuum that currently exists. The paper was organized into seven main parts, as follows: The first part presents the Introduction covering the study objectives, questions, and motivations. The second part highlights the background of the study including corporate governance issues in the banking industry, and the need for the study. The third part covers the Theoretical literature Review where corporate governance theories like Agency Theory (AT) and Resource Dependency Theory (RDT) were used to guide the study. The next part covers the empirical literature review and hypothesis development reviewing past empirical studies on board meetings, the board size, gender diversity, board financial expertise, board education diversity, board independence, and foreign directors and their impact on bank performance. From the reviewed empirical literature hypotheses were developed. The fifth part covers the research design comprising the sample selection, operationalization of the variables, and specification of the model. The sixth part covers the empirical results and discussion covering statistical analysis and findings, robustness checks, and discussions. The last part presents the conclusion, summarizing the study findings, study limitations, and areas for future research. 2. Background Over two decades ago, interdisciplinary research on corporate governance was popular among academicians and regulatory fraternities because of several corporate financial scandals, including those involving Enron, Parmalat, and WorldCom. Researchers across the globe have shown great interest in studying the relationship between corporate governance and firm performance in both developed and developing economies (Bekiaris, 2021; Dhiman & Srivastava, 2021; Mishra et al., 2021). Previous empirical studies have shown the importance of diverse boardrooms in terms of gender, skills, background, and, experience. The latter factors enable the boardrooms to come up with thought-out corporate strategies aiming at mitigating and managing various risks that the entity may face (García-Meca et al., 2015; Song et al., 2020). Given their significance in the economy, bank boards are of greater importance. Bank business is riskier than other business ventures because loan availability is transparent and agent-principal conflicts are severe for banks due to information asymmetry (Skully etal., 2007). Thus, the board of directors plays a crucial role in the governance of both financial and non-financial institutions as their role extends COGENT BUSINESS & MANAGEMENT 3 beyond shareholders, depositors, and regulators (Pathan & Faff, 2013). Recently, boards have been highly criticized for their failure to prevent firms from experiencing financial distress, which has led to a new analytical perspective on the role played by effective boards in reducing various financial and systemic risks faced by firms (Fernández-Temprano & Tejerina-Gaite, 2020). Additionally, previous empirical studies have linked weak corporate governance structures to firm’s inability to meet their financial obligations and in turn record poor financial performance (Díez-Esteban et al., 2022; Ombaba & Kosgei, 2017). The independence of the board members is viewed as an important aspect needed by the board when executing their supervisory role to the management. Factors such as board size, presence of independent directors, CEO duality roles, and board meetings have been linked to a firm’s performance as they tend to increase the board’s structural diversity (Fernández-Temprano & Tejerina-Gaite, 2020; Hermalin & Weisbach, 2003). This has led many researchers to increase their attention on different issues related to board diversity such as the age of the board members, education level, gender, presence of foreign directors, and nationality believed to have a massive impact on the board decision-making process (Fernández-Temprano & Tejerina-Gaite, 2020). It is worth noting that both developed and developing countries have put more emphasis on good corporate governance practices as the latter entails the firm’s commitment to upholding quality corporate governance mechanisms that are crucial for a firm’s long-term survival in a highly competitive business environment (Melón-Izco et al., 2020). 3.Theoretical literature review Many theories explain the relationship between board attributes and bank financial performance. It is argued that a multi-theoretical explanation is important to understand the relationship that exists between board characteristics and bank financial performance (Nguyen et al., 2020). Thus, this current study employs two (2) theories namely agency theory and resource dependency theory in the quest to draw insights from both seminal and recently published papers such as (lu et al., 2022; Makuya, 2024; Quoc Trung, 2022). 3.1. Agency theory The foundation of agency theory focuses on the separation of ownership and control of the entity. Thus, according to this theory board of directors serves as an internal monitoring mechanism that is used to regulate the behavior of the management in the quest to protect the interest of the shareholders (Jensen & Meckling, 1976). Agency theorists argue that the motivation behind a manager’s behaviors is rooted in self-interest acts and seeking external rewards. In most cases, management strives to maximize their interest above the interest of the shareholders. These acts result in a conflict of interest between the management and shareholders (Fama & Jensen, 1983). Thus, this theory argues that the corporate governance mechanism established by the firms can be used to treat principal-agent conflicts. One of the corporate governance mechanisms is the presence of competent and diverse boards that can be used to minimize cy costs (Brennan & Solomon, 2008; Ronen & Yaari, 2008). Empirical studies reveal that banks that hire competent managers stand a better chance of recording better financial results and earnings per share (EPS) even though a manager’s presence in the banks can catalyze the conflict of interest between principals and agents (Quoc Trung, 2022; Shah, 2014). It is worth noting that the diversity of the boards is an added ingredient that will increase the performance of the team because of the different standpoints brought by diverse teams. These teams have a better chance of making informed choices to ensure a firm’s long-term survival. From a theoretical perspective, agency theory supports small and diverse boards to improve company performance (lückerath-Rovers, 2013; Mori & Towo, 2017). Agency theorists assert that smaller boards are more efficient than larger ones and preferably board size should not exceed eight (8) members (lipton & lorsh, 1992). Proponents of agency theory argue in favor of the presence of women directors as the latter’s diverse viewpoint in the board meetings positively influences the performance of the firm. Some empirical studies have argued in favor of small boards and this theory supports the presence of foreigners on board as they bring a different outlook to the board decision-making process (Pathan & Faff, 2013; Rodriguez-Fernandez etal., 2014). Thus, incorporating the agency theory in this study allows the readers 4 A. MAGOMA ETAl. to understand how different board attributes can influence decisions and actions that aim at addressing the conflict of interests between the management and shareholders of the banks. This theory further explains how different board attributes influence the financial performance of banks listed in frontier stock markets in East Africa. 3.2. Resource dependence theory In 1978, Pfeffer and Salancik came up with resource dependency theory, which is more than 50 years old (Pfeffer & Salancik, 1978). This theory argues that the acquisition of external resources is crucial for a firm’s existence and growth. The theory further contends that management plays a vital role in connecting the firm’s development strategies and the resources needed to address the firm’s goals (Quoc Trung, 2022). It is worth noting that a bank’s operations require a variety of resources, none of which can be fully owned by the entity. Therefore, to bridge the gap between the resources needed and those available, it is only natural for top executives to communicate and exchange information with one another due to limited available resources. This is done to help the company grow (Ping & Qihong, 2012; Zhang et al., 2016). Resource constraints can make it difficult for banks to conduct their day-to-day operations efficiently. These constraints can seriously affect bank’s investment activities that highly depend on capital mobilized from the economy. It is worth noting that capital mobilization is an integral factor needed for the survival of banks in the economy. Thus, banks are obligated to adjust their loan-todeposit ratio by issuing fewer loans and making deposit accounts attractive to customers in the quest to ensure the bank’s liquidity position is maintained at an optimum level (Morris, 2007; Quoc Trung, 2022). Furthermore, resource dependency theorists argue that the link between the bank and the outside environment for resource mobilization is effective in the presence of large boards, presence of women directors, skilled board members, and presence of foreign directors (lückerath-Rovers, 2013; Ujunwa, 2012). 4. Empirical literature review and hypothesis development The significance of board attributes in connection to bank financial performance has been the subject of numerous empirical studies. Many characteristics of the board, including its size, meetings, gender diversity, financial expertise, diversity in education, independent directors, and foreign directors impact banks’ financial performance, as demonstrated by studies such as: (Assenga et al., 2018; García-Meca et al., 2015; Hordofa, 2023; lu et al., 2022; Mai et al., 2024; Nguyen et al., 2020; Ntim, 2015; Ntim & Soobaroyen, 2013; Quoc Trung, 2022; Temba et al., 2023). Accordingly, the empirical literature review section will discuss the relationship between various board attributes and the financial performance of banks listed in East Africa’s frontier stock markets. 4.1. Board meetings and bank performance Studies argue that when members of the boards meet frequently, firms’ performance is more likely to be enhanced as members of the board will focus on addressing various issues that aim at maximizing shareholder value (Arora & Sharma, 2016; Conger et al., 1998). The purpose of board meetings and board performance has been the subject of ongoing discussion in the literature. Agency theorists argue that board meetings enable members to carry out their responsibilities for developing strategies and overseeing management successfully. In light of this, they claim that holding regular board meetings results in good financial outcomes (Vafeas, 1999). The frequency of board meetings delays the time needed to make decisions, as well as increases the financial burden on the business due to travel costs and board member sitting compensation. Thus, it is not the number of board meetings conducted but the quality of such meetings that have an impact on the firm’s performance (Oyerinde, 2014; Taghizadeh & Saremi, 2013). Thus, it is maintained that a board meeting is an important tool for settling agency conflicts between principals and agents, which aids banks in developing effective corporate governance frameworks. COGENT BUSINESS & MANAGEMENT 5 A study that was conducted among 20 Indian manufacturing companies from 2001 to 2010 revealed that board meetings exhibited a positive influence on financial performance as measured by Return on Assets (ROA) and Return on Equity (ROE) (Arora & Sharma, 2016). Board meetings have a significant negative influence on bank performance in Africa as measured by ROE suggesting that fewer board meetings are necessary to improve bank performance for a sample of 635 banks spread over 48 African countries (Kyei et al., 2022). A Nigerian study revealed that board meetings exhibited a negative and non-significant impact on a firm’s performance as measured by ROA (Mohammed et al., 2023). Another study conducted in Nigeria showed that board meetings exerted a positive and non-significant impact on bank performance as measured by Tobin’s Q (Aernan et al., 2023). H1: Board meetings negatively influence banks’ performance. 4.2. Board size and bank performance Agency theorists favor smaller boards over larger ones because smaller boards are believed to be more efficient in monitoring the management role in running the affairs of the entity (Pillai & Al-Malkawi, 2018). Resource dependency theorists favor large boards as they believe these boards can strengthen ties between an entity and its external surroundings (lückerath-Rovers, 2013). It is crucial to remember that corporations require diverse boards to add more knowledge, ideas, and experience that will support making decisions vital for the company’s long-term survival (Arora, 2022). Boards with a sufficient number of members may perform their duties more effectively, especially in the case of banks where the size of the board is considered important due to the nature and complexity of the institutions (John et al., 2016). In contrast, smaller boards are believed to be more productive in monitoring the behavior of the entity as opposed to larger ones that are characterized by longer time for decision-making and hence less productive (Nawaz & Ohlrogge, 2022). Previous literature has shown a positive and significant relationship exists between board size and a firm’s performance (Al-Matari et al., 2022; Edeti & Garg, 2020; Goel et al., 2022; Gurusamy, 2017; Mohammed etal., 2023). Another study revealed a negative significant relationship exists between board size and the performance of firms listed on the East African frontier stock markets (Guney et al., 2020). Board size exerted a negative and significant impact on a firm’s performance using data sourced from 52 insurance firms (Isaac et al., 2021). H2: Board size negatively influences banks’ performance. 4.3. Gender diversity and bank performance Resource dependence theorists point out that the presence of women directors can reassure the stakeholders about the firm’s commitment towards diversity, strengthening the firm’s connection to the outside world, and more importantly, boosting the firm’s legitimacy in the eyes of the shareholders (lückerath-Rovers, 2013). Agency theorists argue that having more women on board minimizes agency costs and improves the board’s efficiency by offering the unique perspective needed when making complex decisions that are vital for a firm’s long-term survival (Coles etal., 2008; Mori, 2014). Women on boards are more likely to be independent as compared to men and they are assumed to offer different perspectives in boardroom meetings (De Anca & Gabaldon, 2014). Previous studies have shown the presence of women directors positively influences firm performance (Benaguid etal., 2023; Brahma et al., 2021; Hosny & Elgharbawy, 2022; Jaya, 2020; Kabara et al., 2022) while other studies showed a negative relationship (Adusei etal., 2017; Pletzer etal., 2015). Other studies showed women directors have a positive non-significant impact on listed firms’ performance in Tanzania (Magoma & Ernest, 2023). H3: Gender Diversity negatively impacts banks performance. 6 A. MAGOMA ETAl. 4.4. Board financial expertise and bank performance Proponents of agency theory argue that the board of directors must be financially literate and have the skills needed to oversee and monitor a firm’s overall operations, which will eventually lead to better financial results. Resource dependence theorists argue that relevant financial skills will facilitate external linkages with the outside world that would better help the organization mitigate various risks, gain access to valuable business networks, and foster strategies that will eventually boost a firm’s performance (Mlay et al., 2023). Board members with financial, economic, and business education backgrounds are highly needed in guiding the company effectively and efficiently toward financial issues that are crucial to the firm’s performance (Arifina & Tazilahb, 2016). By possessing financial and accounting knowledge board of directors stands a better chance to understand, scrutinize, and interpret financial reports presented to them by the management (Githaiga & Kosgei, 2022). Financial experts in the boardroom can better mitigate the manipulation of financial results by management, as they are conversant with financial reporting framework this gives them superior knowledge in issues related to the preparation and interpretation of financial reports prepared by the management (Peter etal., 2023). Previous studies have shown a positive relationship between board financial expertise and a firm’s performance (Adams & Jiang, 2020; Jin & Mamatzakis, 2018; Mlay etal., 2023). In contrast, a study in Nigeria utilizing secondary data from 14 listed banks revealed that the financial expertise of the board members exhibits a negative impact on the firm’s performance measured by ROA (Abubakar et al., 2018). H4: Board financial expertise positively influences banks performance. 4.5. Board education diversity and bank performance Board members with different professional fields are highly needed in the boardroom to -increase thediversity that is needed in the decision-making process (Toumi etal., 2016). Board members havethe responsibility of advising the management on various issues needed to improve the performance of thecompanies they have been tasked to control (Kabara etal., 2022). Similarly, a 2022 study conducted in Nigeria showed that educational diversity positively influences the financial performance of listed firms (Kabara et al., 2022). In Ghana, a study that was conducted in 2022 revealed that the proportion of board members with higher educational levels had a negative and significant impact on listed firms’ performance (Andoh et al., 2022). H5: Board educational diversity positively influences banks’ performance. 4.6. Board independence and bank performance Proponents of agency theory contend that independent directors highly assist in resolving principal-agent conflict of interest, as they are expected to monitor and regulate management’s actions towards the usage of a firm’s resources, which in turn will minimize agency issues by ensuring that the principals’ interests are protected (Al-Matari etal., 2022; Al-Msiedeen etal., 2018; Mura, 2007). Independent directors on boards have superior knowledge, abilities, and expertise because of their experience serving on multiple boards. Consequently, their presence in the boardroom adds a valuable contribution to the decision-making process (Pucheta-Martínez & Gallego-Álvarez, 2019; Puni & Anlesinya, 2020). Previous empirical studies have reported mixed and contradictory results between independent directors and firm’s performance for instance positive relationship (Al-Msiedeen etal., 2018; Pucheta-Martínez & Gallego-Álvarez, 2019; Puni & Anlesinya, 2020; Saravanan et al., 2021). Some reported negative relationships (Arayssi etal., 2020; Mishra, 2020) while others reported no relationship existed (Rashid, 2018). H6: Board independence negatively influences banks’ performance. COGENT BUSINESS & MANAGEMENT 7 4.7. Foreign directors and bank performance Resource dependence theorists argue that the presence of foreigners on board is an added ingredient aimed at increasing the vitality of the board in terms of skills sharing, exchange of experiences, and networking the firms with other nations, which can lead to new perspectives and a different problem-solving approach. Consequently, foreign directors provide expertise, knowledge, and new networks that assist the company, in general, to perform better (Mnzava, 2022; Ujunwa, 2012). The presence of many foreigners on board is highly advocated by agency theorists as they believe that foreigners enhance the monitoring of shareholders’ interests and resources (Fama & Jensen, 1983). Empirical evidence on the impact of foreign directors on and firm’s financial performance is inconclusive. Some studies contend that there is no relationship between the presence of foreigners on board and the firm’s performance (Assenga et al., 2018; Jhunjhunwala & Mishra, 2012). Other studies revealed that foreign directors’ participation in the boardroom exerts a negative influence a on firm’s performance (Bekiaris, 2021; Rafinda etal., 2018). It was also evident that other studies showed a positive relationship exists between the presence of foreigners in the boardroom and the firm’s performance (Andoh et al., 2023). H7: Foreigners on boards negatively influence banks’ performance 5. Research design 5.1. Sample selection and data This study adopted an explanatory research design to establish the cause-and-outcome relationship that exists between response and explanatory variables (Magoma et al., 2022; Saunder et al., 2009). A quantitative approach was adopted by sourcing secondary data from audited financial statements and annual reports from listed banks in Kenya, Tanzania, and Uganda for six years from 2017 to 2022. The rationale behind selecting the 2017–2022 timeframe is rooted in data accessibility, economic dynamics, and relevance to contemporary issues in corporate governance studies. The population of listed banks from Kenya, Tanzania, and Uganda was Twenty-three (23). The sampling method used was purposive sampling. Sampled listed banks were selected based on pre-defined criteria. Pre-defined criteria include banks that were listed in the stock markets of these respective countries, and these banks ought to have disclosed their financial statements and annual reports from 2017 to 2022. Thus, Nine (9) banks were dropped due to missing data or banks being cross-listed. Cross-listed banks were selected from their parent countries. Thus, we obtained data from fourteen (14) listed banks from 2017 to 2022 yielding a balanced panel data of 84 bank-year observations. Table 1 shows the sample selection process. 5.2. Measurements of response and explanatory variables and source of data The study used Net Interest Margin (NIM) as the response variable, sourced from audited financial statements retrieved from EA-listed banks’ official websites. The explanatory variables for the study included board meetings, board size, gender diversity, board education diversity, board independence, and foreign directors. These explanatory variables were also obtained from audited financial statements and annual reports on the EA-listed bank’s official website. Bank-specific and industry-specific variables were used as control variables (CV). Bank-specific variables included capital adequacy, bank Table 1. sample of listed banks from nse, Dse, and use. Population of listed banks from nse, Dse, and use 23 number of listed banks with missing data/cross-listed (9) number of banks with data 14 Period (2017–2022)- 6 years Bank-year observations 84 14 A. MAGOMA ETAl. local and international peer-reviewed journals in areas such as green procurement, students’ information systems, electronic procurement, modeling consumer price index, and contemporary issues affecting listed firms in Africa. Ernest Kasheshi is a lecturer at Tanzania Institute of Accountancy (TIA) Mwanza campus, Department of Accounting and Finance. He holds a Master’s degree in Accounting and Finance from Mzumbe University (MU). His research interest is in Corporate governance issues and the financial performance of listed firms across African stock markets. ORCID Anthony Magoma http://orcid.org/0000-0002-1132-0902 Enid Ernest http://orcid.org/0000-0002-4533-7753 Ernest Kasheshi http://orcid.org/0009-0003-8821-4336 Data availability statement Data were retrieved from the annual reports and audited financial statements from the official websites of listed banks in Kenya, Tanzania, and Uganda. Data are freely available from these official websites. References Abubakar, A. H., Ado, A. B., Mohamed, M. I., & Mustapha, U. A. (2018). The effect of risk management committee attributes and board financial knowledge on the financial performance of listed banks in Nigeria. Risk Management, 1(5), 7–13. Adams, M., & Jiang, W. (2020). Do financial experts on the board matter? An empirical test from the United Kingdom’s non-life insurance industry. 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