The Impact of Board Structure on Firm Performance: Evidence from the Nonfinancial Companies Listed on Ghana Stock Exchange

Yusheng Kong ,Emmanuel Anyigbah

doi:10.7176/rjfa/10-6-12

Abstract

The authors are thankful to the National Science Foundation of China (71371087) for the financial support. Abstract The fundamental aim of this study is to examine the relationship that exit between board structure and firm performance of non-financial Ghanaian listed companies. In order to achieve the objectives of the study, unique data were collected from a sample of 28 non-financial companies covering five financial year periods 2012-2017 was used and thereafter analysis done within panel data framework/multiple linear regression framework. The variables such as CEO duality, CEO tenure, board size, board composition and its independence were considered as predictors of the firm performance that was measured employing accounting based performance measures such as the return on assets (ROA), return on equity (ROE) and EPS. I found board size to have a positively significant relationship with firm performance. Keywords: Corporate governance, Board composition, Block holder, CEO-duality, Firm performance DOI : 10.7176/RJFA/10-6-12 Publication date :March 31 st 2019

Highlights

Corporate governance represents the channel and solution that manage the relationship between shareholders and the board of directors
In order to test the hypothesis of the study, the multiple linear regression analysis was adopted using the firm’s financial performance (ROA), ROE and EPS as dependents and Board characteristic comprising board size, board composition, CEO duality and Tenure as independent variables and the firm size and leverage as control variables
The main objective of this research work was to examine the impact of board structure on firm performance evidence from the nonfinancial listed companies on Ghana stock exchange upon the firm performance; Coefficients of Multiple Regression Analysis was utilized

Summary

Introduction

Corporate governance represents the channel and solution that manage the relationship between shareholders and the board of directors. Low level of developments and economic growth in developing countries are attributed to poor performances of companies as a result of low level of corporate governance practices. Boards are expected to perform different functions, which includes monitoring of management to mitigate agency costs ((Eisenhardt, 1989); (Shleifer & Vishny, 1997); (Roberts, McNulty, & Stiles, 2005), hiring and firing of management (Hermalin & Weisbach, 1998), provide and give access to resources (Hillman, Cannella, & Paetzold, 2000); (Hendry & Kiel, 2004), grooming CEO (Slocum, 2006) and providing strategic direction for the firm(Stieglitz & Heine, 2007). Boards have a responsibility to initiate organizational changes and facilitate processes that support the organizational mission (Bart & Bontis, 2003)

Objectives

Methods

Results

Conclusion