Corporate governance and the financial performance of commercial banks in Ghana


  • Samuel Gyamerah University of Electronic Science and Technology of China, No.2006, Xiyuan Ave, West Hi-Tech Zone, 611731, Chengdu, Sichuan, P.R. China
  • Hannah Fosuaa Amo Valley View University, Box AF. 595, Oyibi, Accra, Ghana
  • Sandra Adomako University of Electronic Science and Technology of China, No.2006, Xiyuan Ave, West Hi-Tech Zone, 611731, Chengdu, Sichuan, P.R. China



Corporate governance, Ghana, banks, Financial Performance


This study aims to provide further evidence on the effect of corporate governance on the performance of Ghanaian banks. Two performance measures were used in this study, namely: Return on Asset (ROA) and Cost-Income Ratio (CIR). Data for the analysis were sourced from 21 commercial banks from 2005 to 2015. Regression estimation techniques were employed for analysis purposes. The result revealed that large board size reduces banks’ performance. Furthermore, CEO duality and foreign ownership negatively affect the performance of banks. However, while the effect of CEO duality was significant on CIR, it was not significant in the case of ROA. On the contrary, the effect of foreign ownership was only significant on ROA.  Moreover, board independence has a significant positive effect on both CIR and ROA, while audit committee independence has no significant effect on CIR and ROA. The paper argues that for a good corporate governance practice, banks should institute a small board with more than half of the members being independent directors. Furthermore, the role of the board chair should be separated from that of the managing director/CEO. The study provides insight and further evidence to stakeholders and regulators to deal with the crisis in the Ghanaian banking sector.


Download data is not yet available.


Abdullah, S. N. (2004). Board composition, CEO duality, and performance among Malaysian listed companies. Corporate Governance, 4(4), 47–61.

Aboagye, E., Agyemang, O. S., & Ahali, A. Y. O. (2013). Prospects and challenges of corporate governance in Ghana. International Journal of Scientific and Research Publications, 3(5).

Abor, J., and Adjasi, C. K. D. (2007). Corporate governance and the small and medium enterprises sector: theory and implications. Corporate Governance, 7(2), 111–122.

Adeabah, D., Gyeke-Dako, A., and Andoh, C. (2018). Board gender diversity, corporate governance, and bank efficiency in Ghana: a two-stage data envelope analysis (DEA) approach. Corporate Governance: The International Journal of Business in Society.

Adusei, M. (2011). Board structure and bank performance in Ghana. Journal of Money, Investment & Banking, 19, 72-84.

Akomea-Frimpong (2017). Review of empirical studies on bank efficiency in a developing economy.

Al-Hawary, S. (2011). The Effect of Banks Governance on Banking Performance of the Jordanian Commercial Banks: Tobin’s Q Model. An Applied Study. International Research Journal of Finance and Economics, 71, 34-47.

Baker, H. K., and Gary E. P. (2015). Management views on corporate governance and firm performance. Corporate Governance and Firm Performance. 83-118.

Bank of Ghana (2017). Banking sector summary.

Bank of Ghana (2018). Press release.

Bathala, C. T., and Rao, R. P. (1995). The Determinants of Board Composition: An Agency Theory Perspective. Managerial and Decision Economics, 16, 59-69.

Berndt, T., and Leibfried, P. (2007). Corporate governance and financial reporting. Corporate Ownership and Control, 4, 397-400.

Bokpin, G. A. (2010). Ownership Structure, Corporate Governance, and Bank Efficiency: An Empirical Analysis of Panel Data from the Banking Industry in Ghana. Corporate Governance International Journal of Business in Society, 13(3).

Brownbridge, M., and Gockel, A. F. (1996). The Impact of financial sector policies on banking in Ghana, IDS Working Paper 38, Brighton: IDS.

Buckle, V. (1999). Ghana: the history of banking in Ghana.

Cadbury, A. (1999). What are the trends in corporate governance? How will they impact your company? Long Range Planning, 32, 12–19.

Chung, K. H., Wright, P, and Kedia, B. B. (2003). Corporate Governance and Market Valuation of Capital and R&D Investment”, Review of Financial Economics, 12, 161-172.

Fidanoski, F., Mateska, V. & Simeonovski, K. (2013). Corporate governance and bank performance: evidence from Macedonia, Munich Personal RePEc Archive. JEL Classification, 1-24

Finegold, D.; Benson, G. S., and Hecht, D. (2007). Corporate boards and company performance: Review of research in light of recent reforms. Corporate Governance: An International Review, 5(5), 865–878.

Frimpong, S., Djan, O. G., Bawuah, J., Osman, B. H., and Kuutol, K. P. (2015). Impact of corporate governance mechanisms and banks' performance: Ghana's position. International Journal of Empirical Finance, 4(5), 324-335.

Ghana Banking Survey (2012). Enhancing customer value to sustain profitable growth. PriceWaterhouseCoopers survey.

Hamdan, A. M, Sarea, A. M., and Reyad, S. M. R. (2013). The impact of audit committee characteristics on the performance: Evidence from Jordan. International Management Review, 9(1), 32-41.

Haniffa, R., and Hudaib, M. (2006). Corporate governance structure and performance of Malaysian listed companies. Journal of Business Finance & Accounting, 33, 1034-1062

Hu, Y. and Izumida, S. (2008). Ownership concentration and corporate performance: A causal analysis with Japanese panel data. Corporate Governance: An International Review, 16(4), 342–358.

Hutchinson, M. (2002). An analysis of the association between firms’ investment opportunities, board composition, and firm performance. Asia Pacific Journal of Accounting and Economics, 9, 17-39.

Jensen, M. C. (1993). The modern industries revolution exits and the failure of the internal control systems. Journal of Finance 48(3), 832-880.

Kajola, S. O. (2008). Corporate governance and firm performance: The case of Nigerian listed firms. European journal of economics, finance and administrative sciences, 14, 16–28.

Khan, K., Nemati, A. & Iftikhar, M. (2011). Impact of corporate governance on firm performance evidence from the tobacco industry of Pakistan. International Research Journal of Finance and Economics, 61, 8-14.

Kyereboah-Coleman, A. (2007). Corporate governance and firm performance in Africa: a dynamic panel data analysis. International Conference on Corporate Governance in Emerging Markets, Sabanci University, Istanbul, Turkey. 1-20.

Kyereboah-Coleman, A., and Biekpe, N. (2006a). The link between corporate governance and performance of the non-traditional export sector: evidence from Ghana. Corporate Governance: The international journal of business in society, 6(5), 609 – 623.

Kyereboah-Coleman, A., and Biekpe, N. (2006b). Do Boards and CEOs Matter for Bank Performance? A Comparative Analysis of Banks in Ghana. Journal of Corporate Ownership and Control, 4(1): 119-126.

Lawal, B. (2012). Board dynamics and corporate performance: Review of literature, and empirical challenges. International Journal of Economics and Finance, 4(1), 22-35.

Lipton, M., and Lorsch, J. W. (1992). A modest proposal for improved corporate governance. Business Law. 48, 59-77.

Love, I. and Rachinsky, A. (20078). Corporate governance, ownership, and bank performance in emerging markets: evidence from Russia and Ukraine. Corporate and Capital Market Governance in Emerging Economies, 51(2), 1-37.

Mashayekhi, B., and Bazaz, M. S. (2008). Corporate governance and firm performance in Iran. Journal of Contemporary Accounting & Economics, 4(2):156–172.

Nyarko, F. K., Yusheng, K., and Zhu, N. (2017). Corporate governance and performance of firms: empirical evidence from the banking sector of Ghana. Journal of Economics and International Business Management 5(1), 14-29.

Papanikolaou, E. & Patsi, M. (2009). Corporate governance and bank performance. International Hellenic University. Available at (accessed March 10, 2019).

Park, Y. W. and Shin, H. H. (2003). Board Composition and Earning Management in Canada. Journal of Corporate Finance, 185, 1-27.

Prais, A., and Winsten, K. (1954). Prais-Winsten Estimator for AR(1) Serial Correlation.

Prevost, A K, Rao, R P, and Hossain, M (2002). Determinants of board composition in New Zealand: A simultaneous equation approach. Journal of Empirical Finance, 9, 373-397.

Sarpong, J. D., Winful, E. C, and Ntiamoah, J. (2013). Determination of wide interest margins in Ghana: A panel EGLS analysis. African Journal of Business, 7(32), 535–3544.

Stulz, P. (1999). Globalization, corporate finance, and the cost of capital. Journal of Applied Corporate Finance, 12(3), 8–28.

Tornyeva, K., and Wereko, T. (2012). Corporate governance and firm performance: evidence from the insurance sector of Ghana. European Journal of Business and Management, 4(13), 95–112.

Triki, M. & Bouaziz, Z. (2012). The impact of the board of directors on the financial performance of Tunisian companies. International Journal of Managerial and Financial Accounting, 8(3), 1–17.

Uadiale, O. M. (2010). The impact of board structure on corporate financial performance in Nigeria. International Journal of Business and Management, 5(10), 155–166.

Van den Berghe, L., and Levrau, A. (2004). Evaluating boards of directors: what constitutes a good corporate board? Corporate Governance: An International Review, 12(4), 461–478.

Wahab, E. A. A., Haron, H., Lok, C. L., and Yahya, S. (2015). Does corporate governance matter? Evidence from related party transactions in Malaysia. International Corporate Governance, 131-164.

Young, B (2003). Corporate governance and firm performance: are there a relationship? Ivey Business Journal Online, 1-4

Zábojníková, G. (2016). The audit committee characteristics and firm Performance: evidence from the UK. JEL classification, 1-60.

Zhou, H., Owusu-Ansha, S., and Maggina, A. (2018). Board of directors, audit committee, and firm performance: Evidence from Greece. Journal of International Accounting, Auditing, and Taxation, 31, 20-36.




How to Cite

Gyamerah, S. ., Amo, H. F., & Adomako, S. (2020). Corporate governance and the financial performance of commercial banks in Ghana. Journal of Research in Emerging Markets, 2(4), 33-47.