Governance Structure, Code Compliance and Banks Performance

Abstract

The study examines the extent of board structure, compliance as recommended by Ghana's Corporate Governance Code and its impact on performance. A sample of 20 Ghanaian universal banks out of 28 was used, by comparing results for 2010 & 2013. The study discovered that Ghanaian banks have generally complied with the Code of Best Practice and have adopted the recommended governance structures, even before it was officially introduced in November 2010. It was observed that duality in leadership is unknown to the banks; Ghanaian banks have separated the board chairman's position from the CEO. The study also reveals almost universally, the adoption of board subcommittees such as the audit, management and remuneration committees, and at least 50% or more of independent directors' representation on boards excluding the board chair. However, the study has evidence to suggest that the board attributes recommended by the Code caused improvements to performance of banks, but those few banks that had changed some governance attributes brought also about improved performance and higher compliance. The argument that banks have a unique regulation and most study turn to ignore banks when examining governance was found not to be true. Hence compliance is not only more of legal and regulatory requirement, but response to agency conflict.