The Relationship Between Corporate Governance Mechanisms And Sustainable Performance Among Listed Firms In Ghana

Sustainability performance in relation to creating effective value in the last two decades has court much attention.It's in conjunction with this that the sustainable goals for agenda 2030 were promulgated and this has caused firms around all over the world to have realized the importance of setting strategies based on sustainable performance.Due to the increasing public awareness of the role that corporations must play in relation to climate change and their involvement with various environmental,economic and social scandals,capital providers and other related stakeholders are pressuring companies to accept greater responsibility for sustainable development.The increased importance of corporate social responsibility has also been associated with an increased demand for better information on companies' sustainability performance.Although sustainability performance and reporting are(still)voluntary,internal and external CG mechanisms/ pressures may urge companies to become more responsible for their sustainability performance.Nevertheless,there is little empirical evidence describing the relationship between CG mechanisms and firm sustainable performance among Ghanaian non-financial listed firms.The main objective of this study is to investigate the impact of CG mechanisms on firm's sustainability performance.Specifically,the study seeks to: The first aim of the study is to analyze the influence of internal mechanisms of CG impact on the environmental performance of listed firms in Ghana.Secondly,to review the effect of internal mechanisms of CG impact on the social performance of listed firms in Ghana.The third objective is to evaluate the extent to which external mechanisms of CG impact on the economic performance of listed firms in Ghana.Also,to simulate the influence of external mechanisms of corporate governance impact on the environmental performance of listed firms in Ghana.Fifth,the research hopes to explore the effect of external mechanisms of corporate governance impact on the social performance of listed firms in Ghana.Finally,the study aims to make policy recommendations on the weakness of the CG mechanism in Ghana in optimizing transparency and accountability in the management of listed enterprises.Data on to board structure,board independence,CEO duality,executive compensation,external audit and stakeholder activism from a sample of 22 listed firms was selected from the Ghana stock exchange for extended study.The study period was set between 2009-2018.Statistical techniques including the unit root test,Vector Error Correction Test,co-integration test and regression model such as the OLS,DOLS and GMM were modeled to establish relationship among the independent and the dependent variables.The results showed that all the internal mechanisms(board structure,board independence,CEO duality and executive compensation)were statistically significant at the 95% confidence interval under the economic performance.At a confidence interval of 95% the results show that all the internal mechanisms were significant and positively linked with the environmental performance.The link between CEO duality and social performance of firms was however negative,whereas,board structure,board independence and executive compensation were positive and statistically important.The outcome on the external mechanisms,namely the external audit and stakeholder activism were found to have positive connections with economic,environmental and the social performance of firms.This study contributes to the existing writings by providing an overview of the interplay between corporate governance and sustainable performance in the developing country milieu.It provides the rudimentary knowledge in the designated area for both young and advanced researchers with focus on corporate governance practices,prospects and challenges in sub-Saharan African countries,of which Ghana is significant.It provides a comprehensive feedback on how best to integrate CG systems and principles in finding the best fit model that will suit a given firm based on its own strength and weakness.It also presents a clear understanding of the relationship between CG and the sustainability performance for firms.The reason behind this study was also provided empirically-thus,through a comprehensive evaluation of the convergence of corporate governance and an explicit discussion and analysis of the two broad mechanisms of CG(the internal mechanisms of corporate governance-board structure,board independence,CEO duality and executive compensation,and external mechanisms of corporate governance-external audit and stakeholder activism).Summarily,it can be realized that,the environmental performance and the social performance of firms are equally important as the economic performance of firms.based on the findings,both the internal and external mechanisms of corporate governance interchangeably work towards the sustenance of Ghanaian firms.We therefore recommend the separation of CEO duality due to its adverse effect on sustainability performance of Ghanaian firms.We also recommend that boards dominated by independent executive directors as well as board diversity should be vigorously practiced due to its positive link with sustainable performance.Likewise,Ghanaian firms should pay heed to external audit and stakeholder activism because they also have positive link to firm's sustainability performance.For this reason,the study recommends that Ghanaian firms should strictly adhere to the principles of CG.Firms should also continue to peruse these mechanisms in order to find the best fit that suites the needs and requirement of their firms.Ghanaian firms should also pay much attention to the both environmental and social activities.