DO MEASURES OF NON-FINANCIAL PERFORMANCE MATTER? AN EMPIRICAL INVESTIGATION OF BOARD CHARACTERISTICS AND NON-FINANCIAL PERFORMANCE OF INSURANCE COMPANIES IN UGANDA
Abstract
Purpose of the study: The study aimed at determining the influence of board characteristics on non-financial performance of Insurance companies in Uganda. Board characteristics included: director ownership, gender diversity, education qualifications, age diversity, board size, and board tenure. Non-financial performance included; Internal business processes, customer focus, organisational learning and growth, corporate social responsibility and environmental impact. There is an inconclusive discussion on weather board characteristics influence non-financial performance as many scholars reviewed focus on the conservative financial performance measures. This study sought to determine the influence of board characteristics on non-financial performance of Insurance companies in Uganda.
Research methodology: The study was positivistic and used a cross-sectional descriptive survey. The study employed a census on 131 insurance companies with effective sample of 108 respondents. The hypothesis was set and tested as there is no statistically significant influence of board characteristics on the non-financial performance of Insurance companies in Uganda using simple linear regression analysis.
Results of the study: The findings from the five sub-hypotheses indicate: Director ownership was found to be negatively and statistically significant with internal business processes. Gender diversity was found to be positively statistically significant with learning and growth, customer focus and corporate social responsiveness. Education qualifications were found positively and statistically significant with corporate social responsiveness and environmental impact. Board tenure was also found positively and statistically significant with customer focus. Then age diversity was found negatively and statistically significant with customer focus.
Conclusion and policy recommendation: In conclusion the findings of the study indicate board characteristics was found to have a positively statistically significant influence on non-financial performance. The study recommended policy interventions: a mandatory board quarter of a minimum of 45% female representation on the board, on age a minimum of 55% of the board should be less than 45 years, a board tenure of three years, and two terms, education level minimum bachelors 30%, masters 40% and Ph.D. 30% and director ownership should be less than 10% of the board. Based on the sub- hypotheses the study further provided evidence of five board characteristics dimensions of gender, age, education, board tenure, and director ownership as the most influential in the study on non-financial performance as they were statistically significant.
Keywords: Board Characteristics, Insurance, Non-Financial Performance, Gender diversity, Age Diversity
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