Assessing the effects of corporate governance on the performance of Small and Medium Scale Enterprises (SMES) in Ghana :A survey of SMES in the Greater Accra Region

Abstract

Small and Medium Scale Enterprises (SMEs) development in Ghana unfortunately is hindered by a number of factors, notable amongst which is the lack of adequate financing. This stems from the fact that the SMEs in Ghana have limited access to capital markets, locally and internationally, in part because of the lack of managerial competencies and proper governance systems in the SME sector. This study assessed the effects of corporate governance on the performance of SMEs in the service sector in the Greater Accra Region of Ghana, to determine the extent to which corporate governance affect the performance of SMEs. To achieve the purpose of the study, quantitative descriptive research design was used. A sample size of two hundred and twenty-four SMEs in the service sector in the Greater Accra Region of Ghana was used for the study. Simple random sampling technique was used to select the SMEs. The data for the study was obtained primarily through the use of a questionnaire, and was analyzed using Pearson Product Moment Correlation and Multiple Regression Analysis. The findings of the study revealed that there is no significant effect of board size, CEO duality, and board composition on the financial performance of the SMEs in the service sector. However, it was revealed that the ownership structure of the SMEs has a significant effect on the financial performance of the SMEs. It is recommended that the shareholders of the SMEs, should delegate the powers of major financial decisions to the board in order to increase the financial performance of the companies concerned.