Relationship between corporate governance and firm performance in Ghana: does compliance to national governance frameworks matter?

Abstract

The study examines the effect of compliance with national governance frameworks on the relationship between corporate governance and the performance of publicly traded companies in Ghana. A sample of 31 companies listed on the Ghana Stock Exchange was drawn for the study based on their annual reports spanning from 2013 to 2022. A new national governance quality index composed of items drawn from world governance indicators and a corporate governance index was developed by principal component analysis. The study used the Huber M-estimation Robust Least Squares (HMRLS) regression method. The findings of our study reveal that corporate governance practices adversely affect the level of firm performance. However, our results demonstrate that compliance with national governance and institutional frameworks plays a significant moderating role in the relationship between corporate governance and firm performance. The study offers managerial implications, as listed firms can adopt effective national governance and institutional quality practices to improve firm performance.