Non-Financial Information Disclosure and Performance of Firms Listed at Dar es Salaam Stock Exchange, Tanzania: is there a Link?

Abstract

Reporting of Non-Financial Information (NFI) is of paramount importance in making investment decisions and is linked to firm performance. However, there has been an escalated debate on the link between the two and the debate has not established a consensus on the direct link between the variables. Thus, the study on which this paper is based established the link existing between NFI disclosure and firm performance of firms listed at Dar es Salaam Stock Exchange (DSE). The mixed methods approach with an explanatory sequential design was used in the study and employing a sample of 21 local listed firms ranging from 2006 to 2019. Panel data were used; the dependent variable was Return on Asset (ROA); the independent variables were non-financial information, indicated by corporate social responsibility information, corporate governance information and risk management information; and control variables were firm age, firm size and geographical diversification. Data for all the variables were obtained from DSE. Semi structured interviews were used to obtain qualitative data. Random Effect model with three estimations (1, 2 and 3) and thematic analysis were used to analyse quantitative and qualitative data respectively. NFI categories used in this study exhibited a positive link to ROA. It is concluded that disclosure of NFI leads to increasing firms’ visibility and image which attracts more investors and this leads to increased firm performance. The findings imply that proper treatment and disclosure of NFI to intended stakeholders contributes to rational decision making which results into increased firm performance. Therefore, it is recommended that firm managers should disclose all important NFI by using different media. This will help them comply with regulatory frameworks as given by both local and international organs. Disclosing the information as required attracts more investors and boosts their capital which at the end improves firm performance.