Corporate governance and performance of banks in Ghana

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Corporate governance is a subject that has become of paramount interest to all economic and business stakeholders, especially since the onset of undesirable global events in the corporate world in the recent past which pointed to weaknesses in governance mechanisms. The purpose of this study was to identify whether there was a relationship between corporate governance practices and performance of banks in Ghana. This study also sought to examine the level of compliance with the Corporate Governance code by banks in Ghana and also compare the corporate governance practices of banks which are listed on the Ghana Stock Exchange with those which are not, and ascertain whether there were notable differences in compliance levels. Nine (9) out of the twenty-eight (28) banks currently operating in the country were involved in this study. Data were gathered mainly from their annual reports over a four-year period. A scorecard approach was used to assess the corporate governance practices of the banks. Return on equity, return on assets, and earnings per share were selected as the performance indicators of the banks. The results of the study showed a general improvement in the corporate governance practices of the banks over the period. Higher levels of corporate governance were found with banks listed on the Ghana Stock Exchange, as compared to those which are not. Further analysis of the results revealed a weak, positive correlation between corporate governance and both return on equity and earnings per share. However, a weak negative correlation was found between corporate governance and return on assets. Recommendations were made that regulations which will compel banks to adhere to corporate governance principles be instituted by the Bank of Ghana. Similar research work on corporate governance practices by firms in other industries in Ghana was also suggested.
A thesis submitted to the Department of Accounting and Finance in partial fulfilment of the requirements for the award of Master of Business Administration (Finance) ,