Moderating Role of Corporate Governance in the Control Mechanisms-Revenue Collection Nexus: Evidence from Tanzanian Local Authorities
Abstract
Local Government Authorities (LGAs) in Tanzania depend on self-generated revenues and transfers from the central government, yet many still fail to meet their own-source revenue targets despite a number of reforms. Prior studies examined internal controls, human capital, information systems, or governance in isolation, providing limited insight into their combined effects and the role of governance in conditioning these relationships. In contrast, this study jointly analyses these resources and the moderating role of corporate governance on revenue performance in LGAs. Guided by the COSO internal control framework, Agency Theory and the Resource-Based View, the study employs Partial Least Squares Structural Equation Modelling (PLS-SEM) on 358 responses from internal auditors, finance and revenue officers, and managers across 36 LGAs. Results reveal that Corporate Governance, Financial Management Information Systems (FMIS), Human Capital Management (HCM), and Risk Assessment (RA) each exert significant positive effects on revenue collection. Moderation analysis shows that governance strengthens the effect of FMIS but diminishes the contribution of HCM, while its interaction with RA is not significant. These outcomes underline the nuanced role of governance—supporting technology-based systems yet sometimes substituting for human capital. Theoretically, the study extends the COSO framework by demonstrating asymmetric interactions between governance and organisational resources. Practically, it highlights the need for LGAs to align governance structures, staff capabilities, FMIS, and risk-management processes to strengthen own-source revenue collection.
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