Governance, Culture and Firm Performance in West Africa

Abstract

This is an empirical study on compliance with corporate governance and its effect on firms’ profitability in West Africa with focus in Ghana. The study equally tests the moderating role of national culture in the nexus between corporate governance compliance and firms’ profitability. Quantitatively, a total of 1,200 participants were reached through surveying in the old ten regions of Ghana, proportionate to the 2010 national census and housing figures. This was informed by institutional theory and stakeholder theory. The study established that compliance with corporate governance tenets has a significant positive effect on the profitability of firms, and that national culture has a significant positive moderating effect on the relationship between compliance with corporate governance and the profitability of sampled firms. The findings have statistical significance that an increase in compliance with corporate governance codes by firms would lead significantly to increased profitability; and that the national culture factor, when interacting with corporate governance compliance, brings about increased profitability. Backed by empirical results, the study gives direction for future research with recommendations.