PurposeThe purpose of this paper is to investigate the relationship between corporate governance failures and financial distress in Zimbabwe's banking sector.Design/methodology/approachThe study uses the case study method. It discusses cases of banks currently in financial distress. Data collection was through desk research. The analysis is qualitative. Judgemental sampling was used in selecting the eight abridged cases.FindingsIn all cases of pronounced financial distress, either the chairman of the board or the chief executive wields disproportionate power in the board. The disproportionate power emanates from major shareholding. The overbearing executive overshadows other directors, executive and non‐executive, thus creating power imbalance in the board. The study shows that financial institutions in Zimbabwe (as cited in abridged cases) underestimated the competitive forces that resulted from first, economic deregulation and later economic decline coupled with political meltdown. In order to survive, banking institutions significantly shifted from their core business. In all cases the institutions ended up engaging in financial and accounting imprudence. The study also shows that an active role by regulatory authorities directly contributes to observance of good corporate governance practices.Originality/valueThe value of the paper is in its contribution of knowledge in an area that is least researched in Zimbabwe. The paper should be quite useful to academics in terms of understanding developing country corporate governance issues. The paper is also valuable to business executives especially those operating in economies under stress.
This paper examines how Export Processing Zone firms in Zimbabwe have responded to the economic crisis in Zimbabwe. The study investigated how exporters are responding to dissipating competitive advantages. Data was collected from a sample of 30 firms. It was analysed through factor analysis to extract constructs considered competitive advantages or disadvantages. Results show competitive advantages pursued are centred on three key factors, i.e., production, pricing, and product. Competitive disadvantages are in the area of product quality and pricing. The two competitive disadvantages are developing a contagious effect on the remaining advantages, thus, deepening the firms into the crisis.
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