Corporate governance and financial performance of listed banks: evidence form emerging market

Abstract

One of the important elements in this century's business world that has received attention is corporate governance. The recent economic scandals and financial crisis have made it necessary to investigate the role of corporate governance on firm performance. The survival of firms has thus been associated with the existence and application of good corporate governance practices. This study examines the effect of corporate governance on financial performance of banks listed on the Ghana Stock Exchange. The study employs secondary data collected from 60 firm-year observations, consisting of seven listed banks from 2004 to 2012. The study employs pooled cross-sectional ordinary least squares regression analysis to predict the effect of the corporate governance variables on the financial performance of the listed banks. The findings from the study suggest a negative statistical significant association between board composition and the performance indicators, except for return on equity of the banks. CEO tenure is positively associated with the performance indicators of the banks. It is recommended that the listed banks should implement policies that would define the number of outside directors on their boards to enhance maximum benefits from the practice of good corporate governance.

Corporate Governance Dynamics and Financial Performance: Analysis of Listed Commercial Banks in the Ghanaian Context"

“…In a study by Adeabah et al (2018), a board that is gender-diverse increases the efficiency of a bank until a certain point; hence, they argue that diverse boards lead to better decision-making and efficiency in banks. A similar finding has been found by Nyarko et al (2017) who hold that factors such as the size of the board and the presence of long-serving CEOs have a positive relationship with the financial performance of Ghanaian banks. This implies that for banks, experienced leadership including having a big board can improve financial health.…”

“…A range of prior studies have examined the linkages between corporate governance and performance measures like return on assets (ROA) and return on equity (ROE) for Ghanaian banks. While many have found positive correlations, the research has often focused narrowly on either listed banks, rural banks, or the industry as a whole, without differentiating foreign and local institutions (Agyemang et al, 2013;Adusei 2011;Appiah et al, 2017;Darko et al, 2016). Very few studies have assessed impacts on bank efficiency as well, despite the recent crisis partly stemming from poor cost management (Adeabah et al, 2018).…”

The impact of environmental disclosure and the quality of financial disclosure and IT adoption on firm performance: Does corporate governance ensure sustainability?

“…The second line of evidence suggests an adverse association between CG and financial performance (Appiah et al, 2017;Benadetta Munyiva et al, 2020). Patel et al (2018)…”

Leveraging business failure to drive eco‐innovation adoption: An integrated conceptual framework

“…Following a business failure, eco-innovation efforts can be propelled by external factors such as government regulations, newly established industrial standards or certifications, and pressure from external stakeholders, which are often beyond the control of organizational leaders (Appiah et al, 2023). The potential financial repercussions of not embracing eco-friendly practices compel firms to develop products that align with new regulatory requirements and cater to consumer demands for eco-friendly products.…”