Corporate governance practices and performance of listed banks in Ghana

Abstract

The financial performance of banks in Ghana has come under serious scrutiny recently. Some policymakers have argued that the financial success of companies is contingent on the corporate governance mechanisms ensured by these firms. This investigation therefore sought to verify the veracity of this public conjecture by specifically examining one, the effect of board size on the financial performance of banks. Two, to assess the effect of board independence on the financial performance of banks, and three, to analyze the nexus between board gender diversity and financial performance of banks in Ghana. The investigation adopted the explanatory research design and the quantitative approach toward its inquiry. A panel of secondary data was collected from 2008-2022 from 11 listed banks in Ghana drawn through the census sampling technique. The random technique was selected from the fixed and random estimation techniques for analysis through the Hausman test. Finding revealed that board size has a significant positive effect on both Return on Asset (ROA) and Return on Equity (ROE). Again, the study demonstrated that board independence has a statistically significant adverse effect on ROA and ROE. Finally, the result showed that board gender diversity has a positive and statistically significant effect on the financial performance of banks. Banks should increase the number of their board of directors and minimize the number of non-executive directors on their board.