Board Characteristics and performance of listed firms in Ghana

Purpose This study aims to compare the impact of board characteristics on the performance of listed non-financial firms to the impact of board characteristics on the performance of listed financial firms (commercial banks) in Ghana. Design/methodology/approach The fixed and random effects models with generalized least square specifications are used in estimating regressions to correct for heteroscedasticity and serial correlation. Additionally, this study uses lagged models of the board variables to address the possibility of the presence of endogeneity and to generate robust estimates. Findings The empirical results show some similarities and differences on the impact of board characteristics on the performance of listed non-financial firms and banks. On similarities, for both non-financial firms and banks, board size is seen to have a significant non-linear impact on Tobin's q. Also, the proportion of foreign board members shows a positively significant relationship with firm performance for both listed non-financial firms and banks. The effect of the proportion of board members with higher educational qualifications on firm performance appears to be negative and statistically significant for both sample of firms. On the other hand, the impact of board composition and board gender diversity on firm performance differs from listed banks and non-financial firms. Research limitations/implications The panel regressions for the listed banks were run on 63 observations because of the small sample size for the listed banks. Though enough for estimation purposes, inferences from results should be made with caution. Originality/value This paper, unlike most corporate governance - firm performance studies, focuses not only on listed non-financial firms but also on listed banks. From a multi-theoretical perspective, this paper provides a comparative analysis on the impact of board characteristics on financial performance of listed non-financial firms and banks.