Corporate Governance In Ghana

KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY

COLLEGE OF HUMANITIES AND SOCIAL SCIENCES

SCHOOL OF BUSINESS

COPORATE GOVERNANCE AND PERFORMANCE OF MANUFACTUURING FIRMS IN GHANA

BY

ALBERT ASIAMAH

ADESOLA MAYUNGBE MUYIBAT

ASAMU Abdul-MALIK ADEBOYE

SUPERVISOR

MISS BEATRICE OSEI

CHAPTER ONE INTRODUCTION

1.0 Introduction

Chapter one discusses the background of the study on corporate governance and performance of manufacturing firms in Ghana, the problem statement, objectives of the study, research questions, scope of study, limitation of study and finally the significances of the thesis topic.

1.1 Background To The Study

Corporate governance has gained pre-eminence in the late 1990’s and early 2000 following the spectacular

Corporate governance principles of best practices was published by the Ghana Securities Exchange Commission in 2010. Ghanaian governments has pursued the goal of large-scale industry state-led industrial development in order to alleviate poverty and improve the standard of living in the economy. The manufacturing sector plays an important role in the economy of Ghana and needs much attention. Organisation for Economic Co-operation and Development (O.E.C.D. 2014) posits that countries who seek to implement corporate governance principles should monitor their corporate governance framework, including regulatory and listing requirements and business practices, resulting in strength and maintenance in its contribution to market integrity and economic performance. Studies has also shown that good corporate governance maximizes the profitability and long term value of the firm for the shareholders (Khumani et al, 1998). Banerjee et al (2009) also states that effective corporate governance is critical to all economic transactions especially in emerging and transition economies. Hence the need to develop good corporate governance in countries has become

According to Ghana Statistical Service report in 2015, the manufacturing industry growth rates of Gross Domestic Product at 2006 Constant prices recorded a decrease from 17.0 in 2011 to 1.0 in 2014. This is a great concern and needs to be addressed urgently. There is a need for a more competitive manufacturing sector to enhance growth of the economy of Ghana. Investments in the manufacturing sector is necessary and the need for management and the government of Ghana to ensure their profitability is required for the growth of the manufacturing industry and the economy as a whole. Increasing number of research into corporate governance has been conducted in countries all over the world including Ghana. Some studies prove that good corporate governance will improve company performance, others also prove that there is an inverse relationship between corporate governance and performance whilst others have even failed to find any significant link between these factors (Ghabayen, 2012). The divergence in these views is as a result of national culture (Ranjbar, 2009) which differ from country to country. In addition, Maria Maher and Thomas Andersson (1999) states, “the effectiveness of different corporate governance systems is influenced by