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.