Assessing the Effect of Corporate Governance on the Financial Performance and Market Value of Firms Listed on the Ghana Stock Exchange

Abstract

The main aim of the current study is to investigate the effect of corporate governance on the financial performance and market value of firms listed on the Ghana Stock Exchange. Based on the aim of the study, the study specifically seeks to examine the relationship between board size and financial performance, to investigate the relationship between board composition and financial performance as well as to assess the influence of board committee structures on financial performance of listed companies. In line with these objectives, secondary data was collected from the Ghana Stock Exchange, the Bank of Ghana and from the website of listed companies. The study span from 2008 to 2018. The Dynamic Ordinary Least Squares (DOLS) was used to establish the relationship between the variables under study. The coefficient of Board Composition was -.0716. This shows that Board Composition is negatively correlated with ROE. The coefficient of Board Size was 1.429 indicating a positive relationship between board size and ROE. In terms of CEO duality, the relationship is positive with a factor of 0.374. The coefficient of the adjusted R2 is 0.137 which is equivalent to 13.7 percent. The findings of the study were discussed and recommendations made for policy makers.