Effect of corporate governance and financial reporting quality on financial performance of listed firms in ghana
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Date
2023
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KNUST
Abstract
The study aimed to investigate the impact of corporate governance and financial reporting quality on the financial performance of publicly listed firms in Ghana. Utilizing a quantitative approach and panel data analysis, the study examined secondary data from the annual financial reports of 10 selected firms listed on the Ghana Stock Exchange between 2010 and 2021. The research design employed explanatory methods, with random effect regression models and robustness tests conducted using a dynamic model. The findings of the study reveal several significant relationships. Firstly, a positive association was found between board size and financial performance, indicating that larger boards are linked to improved financial outcomes for listed companies in Ghana. This finding aligns with the theoretical framework of agency theory, highlighting the benefits of diverse skills, expertise, and perspectives within larger boards. Secondly, the study demonstrates a positive impact of board independence on financial performance. A higher proportion of independent directors was found to be associated with better financial results. This supports the notion that independent directors contribute to transparency, accountability, and effective decision-making within organizations, promoting sustainable financial performance. Thirdly, the study identifies a positive relationship between audit committee size and financial performance. Companies with larger audit committees tend to achieve better financial outcomes, emphasizing the significance of effective oversight and monitoring in corporate governance practices. Furthermore, the findings highlight the positive relationship between financial reporting quality and financial performance. Companies with higher financial reporting quality exhibited better financial performance, indicating the importance of reliable and transparent financial reporting in enhancing market efficiency and reducing agency conflicts. The study's findings have implications for policymakers, regulators, and practitioners in Ghana. Policymakers can use the results to inform the development and implementation of corporate governance regulations and guidelines. Encouraging companies to have larger boards with diverse expertise and independent directors can contribute to improved financial performance. Similarly, promoting high-quality financial reporting practices and emphasizing the importance of well-sized audit committees can enhance transparency, accountability, and decision-making within organizations.
Description
A thesis submitted to the department of accounting and finance, college of humanities and social sciences school of business in partial fulfilment of the requirements for the award of the degree of master of science accounting and finance