Influence of Firm-Specific Factors on Performance of Firms Listed at Dar Es Salaam Stock Exchange, Tanzania

Abstract

Firm performance (FP) has always been influenced by both financial and non-financial factors. However, a number of contradictions have been registered with regard to which factors have direct influence on FP. Similarly, a reasonable number of studies have concentrated on financial factors leaving non-financial factors fairly unattended. The study on which this paper is based examine the influence of both financial and non-financial specific factors on FP using those firms listed at Dar es Salaam Stock Exchange (DSE). Mixed methods approach with an explanatory sequential design was used. The study applied a sample of 21 local listed firms spanning from 2006 to 2019, and unbalanced panel data were used. Data on the dependent variable (Return on Assets) and on independent variables (firm leverage, sales growth, dividend pay-out, management competence, human capital, firm age, firm size and geographical diversification) were obtained from DSE. Fixed effect model and Pooled Ordinary Least Square was run with three estimations and thematic analysis was used for data analysis. The results indicated that all firm-specific factors had positive significant influence to performance among listed firms. It is concluded that firms whose management teams are competent and have effective understanding of firm-specific factors are in a better position of ensuring that such factors are used for maximum FP. It is recommended to shareholders to hire competent and skilled managers who will control the existing resources available in the firm. It is further recommended to firm managers to borrow when the firm is in financial predicament and pay dividends as per their payment schedule so as to attract more investors.