Board Composition and Financial Performance of Firms Listed on the Rwanda Stock Exchange

Runiga Jean Paul
University of Kigali, Rwanda
Email: runix08@gmail.com

Abstract: This study examined how board composition affects the financial performance of firms listed on the Rwanda Stock Exchange (RSE), with emphasis on board size, independence, tenure, and expertise. A positivist quantitative explanatory design was used. Secondary panel data were extracted from audited annual reports, corporate-governance disclosures, and RSE publications for six listed firms, producing 144 firm-period observations. Return on assets measured financial performance. Descriptive statistics, panel unit-root and cointegration tests, the Hausman specification test, fixed-effects regression, and Prais-Winsten regression with panel-corrected standard errors and a common AR(1) correction were applied. The preferred model used 138 observations, was jointly significant, and explained 72.29% of the variation in financial performance. Board size had a significant negative effect, whereas board independence and board tenure had significant positive effects. Board expertise also had a significant negative association, indicating that formal qualifications do not automatically translate into effective strategic or monitoring contributions. The study concludes that board functionality is more important than structural compliance alone.Based on the findings, the study recommends operationally manageable boards, substantive director independence, balanced continuity and renewal, and competency matrices that align expertise with industry, strategy, risk, and committee needs. The findings provide Rwanda-specific evidence from a frontier capital market and show that board attributes can influence performance in different directions.