The relationship between corporate governance and financial performance of listed banks in Ghana

Abstract

This study was to assess the relationship between corporate governance and firm performance of banks in Ghana. It provides insight into the research questions; What is the relationship between board size and financial performance of banks, the relationship between board gender diversity and financial performance of banks in Ghana and the relationship between board composition and financial performance of banks in Ghana. This research was conducted using a causal research design and a quantitative research methodology. A purposive sampling technique was employed to select a sample of nine (9) listed commercial banks for the study. Financial statement of the listed banks from 2010-2020 was used for data analysis. Four variables were employed in this study with financial performance as the dependent variable and board size, board structure and board gender diversity as independent variables. A panel regression model was utilized to answer the various research questions. The findings indicates that there is a positive significant relationship between board size and financial performance and also having a board with a balanced gender composition positively influences the profitability of banks. The findings also revealed that there is a positive significant connection between board composition and the financial performance of banks. The study recommends that financial institutions should consciously evaluate and, if necessary, optimize their board size to increase effectiveness and efficiency. The study also recommends that financial institutions should actively prioritize and promote gender diversity and also diversified their board by incorporating non-executive directors which will contribute to a more wellrounded and innovative decision-making process within the board.