An empirical analysis of the impact of corporate governance on the profitability of pubic listed companies in ghana: a panel data approach
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Date
2023
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KNUST
Abstract
The financial and non-financial sector in the Ghanaian economy has been recently exposed to lots of crises mainly due to corporate fraud and scandals. The negative effects of these crises on the stakeholders of plcs have, therefore, necessitated the review of corporate governance codes in the country. The study employs the dynamic panel data model to examine the effect of corporate governance on the profitability of plcs. To achieve this objective, the study obtains data on 25 plcs from 2017 to 2021. This study aims at examining the effect of corporate governance on the profitability of plcs in Ghana. To achieve objective, the study with four objectives by investigating the effect of each of the four corporate governance variables on the profitability of plcs. The study employs corporate governance variables such as CEO duality, independent audit committee, board size and independent directors and the performance variables include the Return On-Equity, Return-On-Asset and Tobin’s Q. The findings of the study indicate that only CEO duality has a significant effect (0.024176) on the ROA of plcs in Ghana. In appendage, only CEO duality (0.043246) and independent auditor (-1.180545) have a significant effect on the ROE of plcs. Moreover, only CEO duality (0.0032) has a significant effect on the TQ of plcs. Plcs should look at practicing the one-tier system as that improves the profitability of the firms. In appendage, plcs should ensure that the acquisition of independent audit committees would not financially drain the companies. Hence, the firms need to be prudent in the acquisition of independent auditors.
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This thesis is submitted to the Kwame Nkrumah university of science and technology, Kumasi in partial fulfillment of the requirement for the award of the master of business and finance in strategic management and consultancy degree