Effect of Corporate Governance on Financial Distress: Evidence from Listed Firms at Ghana Stock Exchange

This study was conducted to determine the effect of corporate governance on financial distress of listed firms at Ghana Stock Exchange (GSE) using panel data from 2015 to 2019. Specifically, the study focusses on: The effect of board size on financial distress of listed firms at GSE, the effect of board gender diversity on financial distress of listed firms at GSE, the effect of ownership concentration on financial distress of listed firms at GSE and the effect of number of non-executives on financial distress of listed firms at GSE. OLS Regression Model has been conducted using EVIEWS 11. The data has been validated using normality, multicollinearity and Heteroscedascity test as recommended by previous research due to their robustness. The study found that 15.5% variability in financial distress of listed companies is explained by corporate governance practices of the listed companies. This result suggests that a unit change in corporate governance practices will bring about 12.5% changes in financial distress management. The study found that board size was significant determinant of financial distress. Again, the study further found that board diversity was significant determinant of financial distress. Moreover, the study found that managerial experience of the board was significant determinant of financial distress. However, non-executive and capital structure was not determinants of financial distress. The study concludes that corporate governance exerted significant influence on financial distress of listed firms at Ghana Stock Exchange. The study recommends that selected firms at GSE must develop and formulate good policies to help regulate and manage board members so that the decision-making process of the firm can be facilitated to achieve firm goals and objectives while maintaining financial stability.