Board Size, Internal Control, and Banks Performance in Ghana

Abstract

ABSTRACT The study examines the moderating role of board size in the relationship between internal control and bank performance. Secondary data was obtained from the annual audited report of all the 23 commercial banks in Ghana. Descriptive research design with census method was used thus all the 23 commercial banks were used for the analysis. Multiple linear regression was used to analyse the extent to which each of the objectives, concerning monitoring and control activities affects commercial banks’ performance in Ghana. The study found that there is a positive and significant relationship between control activities and the financial performance of banks in Ghana. The findings also revealed that there is a significant positive relationship between monitoring and financial performance. Further, it was shown that there is a positive and significant moderating effect of board size on the relationship between internal control and financial performance of commercial banks in Ghana. One can therefore conclude that a larger number of board members have the tendency to increase the Return on Asset (ROA) of the commercial banks because given the wide variety of industrial knowledge and skills available to help in effective decision making and monitoring. The study, therefore, recommended that stakeholders and shareholders in the banking industry in Ghana should consider appointing a relatively larger board of directors. Future research can exploit all the five components of the COSO Framework in the area of Internal Control systems and bank performance, by using secondary data.