Abstract
Article history: Received December 17, 2015 Received in revised format December 18, 2015 Accepted December 21 2015 Available online December 23 2015 Accountability is instrumental for ensuring that a trusting relationship exists between shareholders and management of corporations in order that there will be enhanced investor confidence. Towards this end, corporate governance measures are instituted to make the executives or management of business organizations accountable for their stewardships of the organizational resources or shareholders’ investments. It is against that backdrop that the Securities and Exchange Commission in Ghana has also developed a code on best practices on corporate governance. However, the extent to which the provisions in the code are consistent with the theoretical and empirical literature is unknown. This paper, therefore, sought to explore whether or not gaps exist between the corporate governance policy and practices in Ghana and extant literature. This paper achieves this by examining characteristics of the board as they exist in Ghana in relations to the literature. The characteristics examined in this paper include responsibilities, optimal size, independence, board composition, and audit and compensation committees of boards. Recommendations are made based on the literature to address gaps that exist.
Highlights
According to the World Bank (2012), countries can be classified into clusters based on per capita income
The role of corporate governance in ensuring high corporate performance has been succinctly captured by Solomon and Solomon (2010, p.14) as follows: “our own empirical research has provided substantial support for the view that corporate financial performance is positively related to corporate governance...we have found from our research that one reason ‘good’ corporate governance, as well as corporate social responsibility, are linked significantly to good corporate financial performance is its link with management quality
This paper examines characteristics of the board such as the responsibilities, optimal board size, degree of independence, board composition, and audit and compensation committees
Summary
According to the World Bank (2012), countries can be classified into clusters based on per capita income. According to Vázquez and Sumner (2012, p.24), Cluster 3 comprises countries “...with high dependency on external flows and high inequality, and moderate poverty incidence (relative to the average for all developing countries) These countries rank third in terms of poverty, malnutrition, non-agricultural GDP, productivity, innovation capacities, and CO2 per capita emissions. This accountability-inspired trust is one of the keys to raising investor confidence within a given economy It is against this background that when public officials are elected or appointed, they are expected to use public funds judiciously to serve the objectives of the governed. Board of directors (BODs) are appointed or elected to align the goals of executive managers with those of the shareholders or to ensure that executive managers become motivated enough to work towards accomplishing the goals of the shareholders This role of the BODs makes them an essential element in the corporate governance process. The purpose of this paper is to benchmark corporate governance policy in Ghana’s private sector (and by extension, the current practices) relative to the best practices derived from theory and research on corporate governance
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