Effects of board composition on performance of listed firms in Ghana

Abstract

This study examines the effect of board composition on performance of listed firms in Ghana. It employed the explanatory research design. Criterion-based sampling technique was used to select eight (8) financial listed firms and twenty-two (22) non-financial listed firms in Ghana. Published annual reports of listed firms were the main secondary source of data for this study. The study specifically examined the impact of board size on performance of firms. It also ascertained the effect of gender diversity on performance of firms. It finally evaluated the effect of board independence on performance of firms listed on Ghana Stock Exchange using ROA, ROE and SMR as the measures of performance for the financial and non-financial listed firms. Using panel regression model, the study found that board size has positive influence on operational or accounting performance of the financial listed firms but has no influence on their stock market performance. It also indicates that both accounting and market performance of non-financial listed firms are not affected by the board size. It also found that board gender diversity has no influence on the performance of both financial and non-financial listed firms in Ghana. The study finally revealed that board independence has significant positive effect on accounting performance of both financial and non-financial listed firms but has no significant influence on stock market performance of both groups of firms in Ghana. The study recommends that shareholders and other stakeholders in the financial sector should consider having relatively large board size for effective monitoring of management’s activities. Stakeholders should ensure that boards of listed firms have high proportion of outside directors to improve performance in their operations