Abstract
Corporate financial performance (CFP) is a key benefit that comes with the adoption and implementation of a good corporate governance structure in organizations. The objective of this paper is to analyze the effect of the six (6) broad corporate governance structures (board composition, board committees, separation of CEO/chairman, size of board, number of board meetings held, and shareholder concentration) on CFP measured by ROA, ROE, EPS, and Tobin’s Q among Ghanaian companies. The target population for the study was the companies that were listed on the Ghana Stock Exchange (GSE) for the period 2015–2020 and purposive sampling methods were deployed in the sample selection. The study found that using ROA as a performance indicator, corporate governance variables affected CFP by 18.95% whilst it influenced ROE by 29.71%. Additionally, corporate governance mechanisms impacted EPS by 52.53% when it was used as a performance indicator and 18.01% when Tobin’s Q was the performance index. The paper concludes that companies that implement the corporate governance guidelines on best practices stand a better chance of enhancing CFP especially with performance targets that integrate shareholder value maximization
Highlights
The call for the split of ownership from control of corporate entities has led to their expansion to companies more powerful and dominant
Corporate governance mechanisms impacted EPS by 52.53% when it was used as a performance indicator and 18.01% when Tobin’s Q was the performance index
The objective of ascertaining whether the 6 corporate governance mechanisms initiated by the regulator have statistically influenced Corporate financial performance (CFP) among listed companies in Ghana has been extensively investigated and discussed
Summary
The call for the split of ownership from control of corporate entities has led to their expansion to companies more powerful and dominant. Researchers and practitioners have made calls for executives to exhibit greater accountability in the governance of companies on behalf of their shareholders (Crane & Matten, 2007). Such calls have placed corporate governance on the highest pedestal in organizational management. Corporate governance has to do with the systems, mechanisms, processes, and structures that are used to control and direct companies (Dahya & McConnell, 2015). It refers to the management of the relationship between the internal governance mechanisms of a company and the extent to which the members of the society conceive the scope of corporate accountability (Oana Pintea, Pop, Dan Gavriletea, & Sechel, 2020)
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