Board of Directors and Firm Performance of Banking Institutions: A Ghanaian Experience

Abstract

We examine how board characteristics and activities affect firm performance of banking institutions listed on the Ghana Stock Exchange. The data come from the annual reports of the banking institutions for the period, 2007-2012. The results of the study show that the proportion of non-executive directors on boards of these institutions positively influence their performances. This clearly highlights that the presence of non-executive directors on boards of these banking institutions enhances monitoring and advisory role of boards thus leading to firm performance. The results also reveal that the number of board meetings per year by the boards of the banking institutions positively affects firm performance. This implies that as the number of board meetings increases, the monitoring and advisory role of boards improves, hence translating into firm performance. The study however, did not provide any significant relationship between board size, the composition of audit committee membership and chief executive status, and firm performance. Our findings have implications for the design of suitable corporate governance structures for listed banking institutions. More so, the results provide information that can inform policy debates within the Securities and Exchange Commission of Ghana and Bank of Ghana.