Impacts of Corporate Governance on Shareholder’s Wealth

Abstract

The objective of the study was to examine the relationship between corporate governance and firm performance measures, the dynamics of these relationship by imploring selected statistical tools and techniques and identify the differences in impacts on financial firms as opposed to non-financial firms. Guided by literature reviewed on agency and stakeholder theories, study used annual data to estimate the responsiveness of the various firm’s performance to patterns of corporate governance variables from the period of 2011-2016 and was restricted to twenty seven (27) listed firms on the Ghana Stock Exchange, based on data availability. Data collected was analyzed using panel regression. The findings from the study suggest that the performance of the selected firms on the Ghana stock exchange is affected by CEO Duality and the presence of internal Audit committee. The duality of a CEO being both the CEO and the board chair had a negative correlation with ROE, PMOS and leverage but had a positive relationship with ROA. The study found that both board size and firm age have positive influence on creating shareholders wealth. In reference to the findings from the study, a recommendation was suggested for the structure of the board size, availability and improvement of the internal audit unit in the respective firms.