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Board tenure diversity and shareholder value creation of non-financial companies listed in South Africa

Author

Listed:
  • Douglas Zvinowanda

    (University of South Africa)

  • Elza Odendaal

    (University of South Africa)

Abstract

This research examined the influence of board tenure diversity (BTD) on shareholder value creation (SVC) among 95 non-financial companies listed in South Africa. A quantitative quasi-experimental research design was employed. The data collection sources included integrated annual reports, the Who Owns Whom database and the Osiris database. The study used a fixed effects model to test the hypotheses.  BTD  was measured using the Blau index (BI_BTD), average tenure (AVE_TBM), standard deviation (SD_TBM), and coefficient of variation for tenure board members (TBM), as well as dummies for short tenured boards (AVE_TBM  3) and long tenured boards (AVE_TBM 10)  The proxies of SVC  included standard market value added (SMVA), market-to-book ratio (MTB) and Tobin’s Q (TBQ). The results of curvilinear quadratic models indicate that all BTD  measures had both positive and negative influences on all SVC measures, highlighting an inverted U-shaped effect. The inverted U-shape effect reflects a trade-off between beneficial knowledge accumulation and harmful entrenchment or coordination problems as board tenure diversity increases beyond an optimal level. Given the inverted U-shaped effect, many proposals for corporate governance reform explicitly stress the importance of limiting board tenure. Key Words:Corporate Governance, board tenure diversity, shareholder value creation, South Africa, Theories of diversity, curvilinear models

Suggested Citation

  • Douglas Zvinowanda & Elza Odendaal, 2025. "Board tenure diversity and shareholder value creation of non-financial companies listed in South Africa," International Journal of Business Ecosystem & Strategy (2687-2293), Bussecon International Academy, vol. 7(6), pages 70-89, December.
    • Handle: RePEc:adi:ijbess:v:7:y:2025:i:6:p:70-89
    DOI: 10.36096/ijbes.v7i6.1059
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    References listed on IDEAS

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