Examining The Impact Of Corporate Governance Reforms On Firm Performance In Sub Saharan Africa: The Mediating Effect Of Board Role

Corporate governance has been an important policy agenda in both advanced and embryonic economies globally,particularly following the frequent global corporate cases of fraud,scandals,gross mismanagement of corporate organizations,and concerns of the global financial crisis.This has brought about massive crusade on corporate governance reforms on finding dynamic corporate practices,structures,and systems that ensure that firms remain profitable,attractive,and sustainable in meeting stakeholders' needs while at the same meeting regulatory requirements.It has therefore,become imperative for emerging economies like Ghana,Nigeria,Kenya,and South Africa,to embrace good governance practices in the corporate world.These economies are characterized by frail legal structures,undeveloped capital markets and,poor governance structures thereby exacerbating their exposure to corporate failures.Consequently,this study examined the impact of governance reforms on corporate institutions(using country-specific corporate governance codes)on-board structural characteristics,board roles,and firm performance.More specifically,the study seeks to contribute to the body of knowledge in relation to whether board roles mediate the link between board structural variables and firm performance and the influence that corporate governance reforms(corporate governance codes)have on this relationship.Based on profound literature appraisal exploring research on corporate governance and boards of corporate institutions,a novel model has been developed that relates board structural characteristics(Proportion of non-executive directors,CEO Duality,audit committee independence and diligent of the audit committee)with firm financial performance(ROE and ROA)through intervening variables of dual board roles namely;board monitoring role(Frequency of board meetings)and board resource dependence role(Board size)through a multi-theoretic lens.The study is an archival study with data sourced from the annual corporate governance reports and financial statements of the listed non-financial firms on Ghana,Nigeria,Kenya,and South African stock markets from 2006 to 2018,which covers the periods prior to the introduction of corporate governance codes.It is a quantitative study that uses panel data,which covers a cross-sectional and time-series within the period from 2006 to 2018.Data were mined from 252 companies' annual financial and corporate governance reports.A series of methods were employed in analyzing the data obtained which include;panel unit root tests,the F-test,LM test and Hausman test to judge the pooled,random or fixed effects in the panel data and the results supported the fixed effect Ordinary Least Square(OLS)regression method for analysis.The study results reveal,among others that board roles mediated the relationships between each of the board's structural characteristics and corporate performance.The findings also demonstrate the moderating effect of corporate governance reforms(corporate governance code)and showed that the effects of board structural characteristics on board roles and its impact on corporate performance are higher after the implementation of corporate governance code than before its implementation.More so in relation to board structural variables,the empirical findings showed that CEO duality does not significantly impact the performance measure of ROE;it however has a negative relationship with the firm profitability measure of ROA.Furthermore,the Diligence of Audit committee has a positive and statistically significant with ROE,it is however not significant with ROA whereas the Independence of the audit committee does not show a significant relationship with any of the performance measures.Board Independence(NED)and Board Size have a positive effect and statistically significant on both ROA and ROE.Additionally,the empirical result further reveals that both country and sector-specific effects have an impact on the direction and the extent of the impact of corporate governance on performance and that the direction and the extent of the impact of corporate governance are dependent on the performance measure being examined.This study has significant policy implications.Based on these findings,it recommends that Regulatory authorities and policymakers should consider country-specific uniqueness in corporate governance reform.Further,sub-Sahara African countries should consider making corporate governance reporting mandatory and should set up a follow-up and compliance team to make sure that all listed firms on the various markets do not only comply but meet up with the different expectations of the regulatory bodies as mandated in the code of corporate governance.It further recommends the constitution of an independent nomination committee on the board and envisaging an evaluation criterion for the board members' performance.In summary,this study makes a significant contribution to the theory on board structural characteristics and their impact on board role and firm performance with respect to the effectiveness of the corporate governance reforms.Additionally,this study provided a useful contribution to theory through the use of multi-theoretic perspective in corporate governance studies in a context which is different from most of the studies conducted in the developed economies but provides support to the existing studies by providing empirical evidence that corporate governance reforms cause a change in board structure to better positioned the board in the performance of their monitoring and resource provision roles.