Corporate governance and financial performance of listed deposit money banks in West Africa

Abstract

Orientation: There is little evidence on how corporate governance mechanism influences financial performance in Nigeria and Ghana. Research purpose: The study investigated the effect of corporate governance mechanism on financial performance of listed deposit money banks (DMBs) in Nigeria and Ghana. Motivation for the study: The dwindling performance of listed DMBs has been attributed to poor corporate governance mechanism which has resulted in intense pressure on the board of directors to approve decisions that adversely affect the company’s financial performance. Research design, approach and method: The study employed a quantitative research approach and used panel regression analysis techniques. The study sample consisted of 19 DMBs from the Nigerian Exchange Group and Ghana Stock Exchange for the period from 2014 and 2023. Main findings: This study revealed that managerial ownership has a positive and significant effect on the financial performance of listed DMBs in Ghana. Practical/managerial implications: The findings offer the Board more clarity regarding how to maintain a balanced level of board independence that enables effective decision making aimed at improving the overall performance of banks. The study has practical implications for investors to ensure that boards maintain their size for improving effectiveness and achieve optimal financial performance. Contribution/value-add: The study provides new evidence on how corporate governance mechanism influences the financial performance of listed DMBs in Nigeria and Ghana. The study’s findings show that present and potential shareholders might evaluate board qualities to make better investment decisions.

Keywords

• board size
• board independence
• managerial ownership
• foreign ownership
• return on assets