The Effect of Board Composition on Corporate Financial Performance: Evidence from Listed Firms in Ghana

  •  Albert Puni    
  •  Bright Addiyiah Osei    
  •  Samuel Bachison Ofei    


This study adds to the literature on corporate governance and corporate financial performance by assessing theeffect of board composition on the financial performance of listed firms in Ghana. Using a static panel regressionmodel, the results show that contrary to the agency theory, inside directors tend to have a positive and significanteffect on corporate financial performance whilst outside directors have a negative but statistically insignificanteffect on corporate financial performance of the listed firms in Ghana. In addition, it was found that the existenceof nomination committees tend to have a negative effect on corporate financial performance of listed firms inGhana. The study recommends that listed firms in Ghana should look at how to continuously empower insidedirectors to be able to perform their work well instead of bringing in more outside directors to check them.Moreover, the nomination process of board members must be made transparent to achieve the objective ofrecruiting competent and ethical minded executives to the board. Guidelines for executive recruitment to theboard must be established and if possible the nomination committee must employ the services ofexecutive-hunting agency which would assist the committee in the recruitment process.

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