When Diversity Meets Experience: Unpacking the Tension between Board Diversity and CEO Experience in East African Listed Firms

Corporate governance is essential for the achievement of a company’s objectivesas a way of mitigating agency problems. This study explored the influence ofboard diversity on the financial performance of East African listed companiesand the moderating role of CEO Experience. Our study utilized secondary datafrom the East African stock exchange markets: the Nairobi Stock Exchange, theDar es Salaam Stock Exchange, the Uganda Stock Exchange, and the RwandaStock Exchange. Our sample included 36 listed nonfinancial companies in EastAfrica, making a total of 325 observations. We employed fixed-effects regressionanalysis to investigate the relationship. Our primary finding shows that boarddiversity positively and significantly influences the financial performance of EastAfrica-listed companies. Additional analysis reveals that a CEO with priorexperience weakens the influence of diversity on financial performance. Ourfindings are robust to alternative measures of diversity. More female directorsimprove the influence of diversity on financial performance. However, it shouldnot exceed 30 percent of the board members. This study contributes theoreticallyto corporate governance literature and informs policymakers on the crucial roleof diversity on the board in East Africa