Corporate Governance and Firm Characteristics on Financial Performance: Evidence from Manufacturing Firms in Ghana

Abstract

This study investigates the relationship between joint corporate governance and firm characteristics mechanisms and firm performance of manufacturing companies in Ghana. The Ghanaian manufacturing industry has experienced stagnation, which the current research attributes largely to challenges in corporate governance and firm characteristics, leading to poor corporate financial performance. The study examines how Board Size (BS), Board Composition (BC), Board Independence (BI), Firm Age (FA), and Firm Liquidity (FL) effect financial performance metrics like Profit Margin (PM), Return on Equity (ROE), and Return on Assets (ROA). Data extracted from five listed manufacturing companies between 2017 and 2022 were analysed using quantile and normal regression models. The results revealed that, while corporate governance and firm characteristic variables do not significantly impact Profit Margin or Return on Equity, there are indications that a balanced board composition could heighten Profit Margin. Also, a higher firm liquidity correlates with a higher ROA, a finding that is statistically significant at the 5% level.

Keywords: governance, financial performance, board size, board composition, firm leverage

DOI: 10.7176/EJBM/15-19-03

Publication date: December 31^st 2023