Impact of Corporate Governance Mechanisms and Banks Performance: Ghana’s Position

Frimpong Stephen, George Ohene Djan, Jonas Bawuah, Osman Babamu Halidu and Peter Kwame Kuutol

International Journal of Empirical Finance, 2015, vol. 4, issue 5, 324-335

Abstract: Corporate governance has become a global issue and continuously gain urgent attention due to corporate scandals and failure in contemporary times. This study examines the impact of corporate governance mechanisms on financial performance using five years data from 2008 to 2012 with a sample of nine Ghanaian commercial banks listed on Ghana Stock Exchange (GSE). Panel data set was used to examine the relationship. Three performance variables were used in this study namely, Return on Asset, Return on Equity and Cost-Income Ratio. The study used seven corporate governance mechanisms variables and three control variables were considered. The study reveals that Return on Asset has a positively significant relationship with Non-executive director, bank size and bank growth and significant negative relationship with Audit Committee size, Board Gender Diversity, Board Business Management Experience and Board Members Education Qualification. Also, Return on Equity is significant and positively related to Non-Executive Director, Leverage and Bank Growth Rate while Bank size is negatively and significant related to return on Equity. Besides, Cost-Income Ratio showed a positively relationship with Audit Committee size and Board Gender Diversity and significant negatively related to Industry specific experience and Non-Executive Directors. The findings suggest in general that banks with buoyant corporate governance mechanisms improve financial performance depending on the kind of measure used.

Keywords: corporate governance; mechanisms; Profitability; banks; Ghana Stock Exchange (search for similar items in EconPapers)
Date: 2015
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