The nexus between corporate governance, political environments, and firm performance: a comparative study of Ghana and Kenya

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Purpose This study aims to examine the effect of political conditions on the relationship between corporate governance and firm performance in two sub-Saharan African (SSA) countries, Ghana and Kenya. Design/methodology/approach This study used a panel data methodology, examining data from a sample of 72 companies (Ghana: 25 and Kenya: 47) from 2018 to 2022. This study used panel quantile regression and the Huber M-estimation robust least squares regression methods. Findings The research reported that larger boards, diversity and ownership concentration do not affect business performance while board independence improves corporate success in both countries. The findings about chief executive officer (CEO) duality were mixed. In Ghana, CEO duality has a positive effect on firm performance, but in Kenya, the study finds that CEO duality hurts firms’ performance. The results found that higher levels of institutional ownership decreased firm performance in both countries. The research found that Ghana’s political environment had a greater impact on corporate governance and business performance nexus than Kenya’s. Research limitations/implications The research is limited to Ghana and Kenya. This study emphasises the necessity for governments in both countries to maintain a stable political environment, implement policies that encourage economic and policy continuity and reduce political uncertainty to improve business conditions. Practical implications This study emphasises the necessity for governments in both countries to maintain a stable political environment, implement policies that encourage economic and policy continuity, and reduce political uncertainty to improve business conditions. Originality/value To the best of the authors’ knowledge, this study is unique because it is the first in SSA to address a research gap by investigating a comparative analysis of the relationship between corporate governance, political environments and firm performance in two distinct countries with different political situations.