Revisiting the relationship between board practices and firm performance

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Abstract

This paper examines whether and how firm performance is influenced by board practices in Ghana. The analysis shows that chief executive officer (CEO) duality has a negative impact on firm performance, evidence that supports agency theory’s position. Further analysis shows that the smaller Ghanaian board size appears to be optimal because it has a positive impact on firm performance. However, the larger non-executive director representation on the board has no impact on firm performance. Overall, these results suggest that the Ghanaian firms should be encouraged to separate the role of CEO and the board chair positions, have a board size of between eight and nine, and make good use of non-executive directors’ time in the board decision process if they are to achieve better performance.

Keywords: Corporate Governance, Board of Directors, Board Practices, Firm Performance

Authors’ individual contributions: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: G30, G32, M13

Received: 09.05.2021
Accepted: 15.06.2021
Published online: 16.06.2021

How to cite this paper: Owusu, A. (2021). Revisiting the relationship between board practices and firm performance. Corporate Board: Role, Duties and Composition, 17(1), 60–68. https://doi.org/10.22495/cbv17i1art6