Chief Executive Officers’ Characteristics and the Financial Performance of Firms Listed on the Dar es Salaam Stock Exchange: The Moderating Effect of Firm Size

Abstract

This study examines how Chief Executive Officers’ characteristics influence the financial performance of firms listed on the Dar es Salaam Stock Exchange and whether firm size moderates these relationships. Guided by the Upper Echelons Theory, the study focuses on CEO age, education, experience, professional skills, and gender. Firm performance is measured using return on assets (ROA) and return on equity (ROE). The sample comprises 21 DSE-listed firms observed over the period 2017–2024, yielding a balanced panel of 168 firm-year observations. A positivist philosophy, an explanatory research design, and a quantitative approach are employed. Descriptive statistics and Pearson correlation coefficients are used to analyze the data. Hypotheses are tested using static panel regression models (pooled OLS and fixed effects) and a dynamic two-step system Generalized Method of Moments (GMM) estimator to address endogeneity and performance persistence. Moderation is assessed by including interaction terms between firm size and CEO characteristics. The results show that CEO education, experience and professional skills are positively and significantly associated with both ROA and ROE. CEO age negatively affects profitability, suggesting that older CEOs’ conservative strategies dampen performance in Tanzania’s evolving capital market environment. Female CEOs show a positive but statistically weak effect on ROE and an insignificant effect on ROA, reflecting the limited number of women in top positions and their constrained influence. Firm size strengthens the positive effects of CEO education, experience and professional skills and mitigates the negative impact of CEO age, indicating that large firms benefit more from highly qualified executives and institutional structures that temper excessive conservatism. The study extends UET to an African frontier market and offers practical implications for regulators, boards and investors regarding CEO selection, succession planning and governance reforms.

Keywords:       CEO characteristics; financial performance; firm size; Upper Echelons Theory; Dar es Salaam Stock Exchange; Tanzania.