The Effect of Corporate Governance on Financial Performance of an Organization: The Case of Some Ghanaian Local Banks

Abstract

This study sought to ascertain how corporate governance practices affect the performance of commercial banks in Ghana, by focusing on solvency and liquidity perspectives. Quantitative research approach was adopted for study. Secondary data source which was obtained from the financial statement of five selected Commercial Banks in Ghana from 2012 to 2017. It was found from the study that, board size has significantly negative effect on both the financial performance and solvency of Commercial Banks in Ghana. Also, the study found Committee Independency and Board Diversity to have significantly positive effect on financial performance of Commercial Banks in Ghana. The study results necessitate that it is prudent for Commercial Banks in Ghana not to place too much emphasis on the board size but should rather place more on quality of board membership. Stakeholders or shareholders of the respective Commercial Banks in Ghana should take into account the likely impact of a board composition on the overall performance of the firm. The board must be diversified in term of executive and non-executive composition