Year: 2016 | Month: December | Pages: 1-118
Corporate Governance and Firm Performance: Evidence from Ghana
Caesar K. Simpson
Swiss Management Center University
The study investigated whether there exists a relationship between corporate governance and firm performance of listed firms on Ghana Stock Exchange. The study constructed a corporate governance index (0~100) using all the six OECD principles of corporate governance as independent sub-variables for 30 of the 36 listed companies, relying primarily on survey responses and secondary data. Using regression and correlation analyses, the study reported evidence that corporate governance is an important factor in explaining the performance of listed companies on Ghana Stock Exchange. The study revealed a strong positive correlation between the overall corporate governance index and firm performance measured in terms of ROA, ROE and Tobin’s Q which were robust with the results of the regression analyses. All the six OECD principles of corporate governance that constituted the index, individually showed strong positive correlation with the three performance variables. The study further investigated whether there exists a relationship between the corporate governance framework of Ghana and the OECD principles of corporate governance. The results indicated a very robust relationship between the two frameworks. The study made use of control variables that were not previously used in other studies on Ghana. The combined control variables also correlated positively with the performance variables and were statistically significant.
Key words:Corporate governance, firm performance, Ghana Stock Exchange, OECD principles of corporate governance, corporate governance index, corporate governance framework of Ghana.