ASSESSING THE IMPACT OF CORPORATE GOVERNANCE ON THE FINANCIAL PERFORMANCEOFSELECTED CO-OPERATIVE CREDIT UNIONS (CCUs) IN ASHANTI REGION

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KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY
ASSESSING THE IMPACT OF CORPORATE GOVERNANCE ON THE
FINANCIAL PERFORMANCEOFSELECTED CO-OPERATIVE CREDIT UNIONS
(CCUs) IN ASHANTI REGION
BY:
SAMUEL BOAMAH, B.COM. (Hons)
A THESIS SUBMITTED TO THE DEPARTMENT OF ACCOUNTING AND FINANCE,
KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY, SCHOOL OF
BUSINESS IN PARTIAL FULFILLMENT FOR THE AWARD OF MASTER OF
SCIENCE IN ACCOUNTING AND FINANCE
SEPTEMBER 2019

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DECLARATION
I hereby declare that this submission is my own work toward the award of the Master of
Science in Accounting and Finance and that to the best of my knowledge, it contains no
material previously published by another person, nor material which has been accepted for
the award of any other degree of the University, except where due acknowledgement has
been made in the text.
Samuel Boamah ……………………. …………………..
(PG 4786118) Signature Date
Certified by
Mr. Kwasi Poku ……………………. …………………..
Supervisor Signature Date
Certified by
Dr. Micheal Adusei ……………………. …………………..
(Head of Department) Signature Date

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DEDICATION
To my dad Mr. Frederick Boamah, my mother Mrs. Hannah Boamah and my brother Dr.
Collins Boamah, for the continuous encouragement and support that has enabled me achieve
my goals. This project would not have been successfully completed without your enormous
support, love and Patience.

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ACKNOWLEDGEMENT
I acknowledge the greatness of our Lord Jesus Christ towards this work; it has been his grace
and favour. I am highly indebted to Mr. Kwasi Poku my supervisor for his encouragement
and critique. To the entire staff of St. Thomas Co-operative Credit Union and my colleague
friends from whom I received valuable comments

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ABSTRACT
This study was aimed to assess the impact of corporate governance on the financial
performance of Co-operative Credit Unions in selected CCUs in the Ashanti Region over the
period of 2011-2018 using quantitative research approach and EVIEW 10 for data analysis.
The study revealed that 61% variability in Co-operative Credit Unions financial performance
are explained by corporate governance practices of the Co-operative Credit Unions when
using ROA as proxy for financial performance. Moreover, the study found that 40%
variability in Co-operative Credit Unions financial performance are explained by corporate
governance practices of the Co-operative Credit Unions when using ROE as proxy for
financial performance. The study revealed that board size was a significant determinant of
return on asset and board composition as an insignificant negative determinant of return on
asset. Number of board meetings was an insignificant negative determinant of return on asset
while director’s remuneration/fee was a significant determinant of return on asset. Also, the
study revealed that number of internal audit committee was an insignificant determinant of
return on asset and number of internal audit meeting a significant determinant of return on
asset. Moreover, study found that 40% variability in the study found that, board composition
was an insignificant negative determinant of return on equity and board size as a significant
determinant of return on equity. Moreover, the study revealed that directors’
remuneration/fee was a significant determinant of return on equity, however number of board
meetings was an insignificant determinant of return on equity. Again, number of internal
audit committee was a significant determinant of return on equity. The study concludes that
corporate governance exerts strong influence on financial performance of CCUs. The study
recommends that management of the CCUs must improve their corporate governance
structure in order to enhance their financial performance.

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TABLE OF CONTENTS
DECLARATION ..................................................................................................................ii
DEDICATION.....................................................................................................................iii
ACKNOWLEDGEMENT.................................................................................................... iv
ABSTRACT ......................................................................................................................... v
TABLE OF CONTENTS ..................................................................................................... vi
LIST OF TABLES.............................................................................................................viii
LIST OF FIGURES ............................................................................................................. ix
LIST OF ABBREVIATIONS................................................................................................ x
CHAPTER ONE................................................................................................................... 1
INTRODUCTION ................................................................................................................ 1
1.1 Background of the study.................................................................................................. 1
1.2 Problem Statement .......................................................................................................... 4
1.3 Objectives of the Study ................................................................................................... 6
1.4 Research Questions ......................................................................................................... 6
1.5 Significance of Study ...................................................................................................... 7
1.6 Scope of the Study........................................................................................................... 7
1.7 Limitations of Study........................................................................................................ 8
1.8 Organisation of the Study................................................................................................ 8
CHAPTER TWO .................................................................................................................. 9
LITERATURE REVIEW...................................................................................................... 9
2.0. Introduction.................................................................................................................... 9
2.1 Theoretical Framework of Corporate Governance ........................................................... 9
2.1.1 Agency Theory............................................................................................................. 9
2.1.2 Stewardship Theory.................................................................................................... 10
2.1.3 Stakeholders Theory................................................................................................... 11
2.2 Empirical Review.......................................................................................................... 11
2.2.1 Board Size and Financial Performance ....................................................................... 11
2.2.2 Board composition and financial performance relationship ........................................ 15
2.2.3 Board committees (audit/supervisory committee) and financial performance relationship
........................................................................................................................................... 16
2.3 Conceptual Framework ................................................................................................. 18
2.3.1 Concept of Corporate Governance.............................................................................. 18
2.3.2 Corporate Governance from Narrow Perspective ........................................................ 19
2.3.3 Corporate Governance from Broader Perspective ....................................................... 21
2.3.4 Corporate Governance Mechanisms ........................................................................... 22
2.3.5 Board of Directors...................................................................................................... 23

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2.3.6 Financial Performance................................................................................................ 25
2.3.7 Conceptual Framework............................................................................................... 28
CHAPTER THREE............................................................................................................. 29
RESEARCH METHODOLOGY......................................................................................... 29
3.0 Introduction................................................................................................................... 29
3.1 Research Design............................................................................................................ 29
3.2 Population and Sampling............................................................................................... 29
3.3 Data Sources ................................................................................................................. 30
3.4 Data Analysis and Presentation...................................................................................... 30
3.5 Model Specifications and Descriptions of Variables ...................................................... 31
3.6 Ethical Consideration .................................................................................................... 32
3.7 Study Area .................................................................................................................... 32
CHAPTER FOUR............................................................................................................... 34
DATA PRESENTATION, ANALYSES AND DISCUSSIONS OF FINDINGS ................. 34
4.0 Introduction................................................................................................................... 34
4.1 Description of Variables in the Model ........................................................................... 34
4.2 Test of Normality, Heteroscedasticity and Multicollinearity .......................................... 35
4.2.1 Test for Multicollinearity............................................................................................ 35
4.2.2 Test for Heteroscedasticity ......................................................................................... 36
4.2.3 Test of Normality Return on Asset.............................................................................. 36
4.3 Correlation Matrix......................................................................................................... 37
4.4 Impact of Corporate Governance on the ROA ............................................................... 38
4.5 Impact of Corporate Governance on ROE...................................................................... 42
CHAPTER FIVE ................................................................................................................ 46
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS................. 46
5.0 Introduction................................................................................................................... 46
5.1 Summary of Findings .................................................................................................... 46
5.1.1 Impact of Corporate Governance on the Financial (ROA) Performance ...................... 46
5.1.2 Impact of Corporate Governance on the Financial (ROE) Performance....................... 46
5.2 Conclusions................................................................................................................... 47
5.3 Recommendations ......................................................................................................... 48
5.3.1 Areas for Future Studies ............................................................................................. 49
REFERENCES ................................................................................................................... 51
Appendix ............................................................................................................................ 58

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LIST OF TABLES
Table 4.1: Descriptive Statistics .......................................................................................... 34
Table 4.2: Breusch-Godfrey Serial Correlation LM Test: .................................................... 35
Table 4.3: Breusch-Pagan-Godfrey Heteroscedasticity LM Test.......................................... 36
Table 4.4: Inter-Constructs Correlation ............................................................................... 37
Table 4.5: Model 1 Return on Asset .................................................................................... 38
Table 4.6: Model 2 Return on Equity................................................................................... 42

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LIST OF FIGURES
Figure 4.1 Test of Normality Return on Asset ..................................................................... 37
Figure 4.2 Test of Normality Return on Equity.................................................................... 37

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LIST OF ABBREVIATIONS
BOD: Board of Directors
CCUs: Co-operative Credit Unions
CEO: Chief Executive Officer
CG: Corporate Governance
OECD: Organisational of Economic Co-operation and Development
OLS: Ordinary Least Square
ROA: Return on Asset
ROE: Return on Equity
SEC: Security Exchange Commission
SMEs: Small and Medium Enterprises
UK: United Kingdom
US: United State
WOCCU: World Council of Credit Unions

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CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Corporate governance has become one of the significant factors that ensure firm growth and
development. For firms to achieve intensions in the business environment, management has
to ensure that effective systems are laid down to make sure that subordinates follow suit the
principles and guidelines of the organization in the achievement of goals and objectives
(Claessens and Yurtoglu, 2013; Puni, 2015). Good corporate governance promotes efficiency
in an organization thus helps to enhance transparency and orderliness in operational
activities.
Also, board and executives are able to focus on organizational goals and objectives to
maximize effort in achieving operational performance. The Organisation of Economic Co-
operation and Development indicated that, good corporate governance helps management to
protect the interest of shareholders and overall increase the financial capabilities of the firm
(Puni, 2015; Nguyen and Nguyen, 2016). Nguyen and Nguyen (2016) further showed that,
effective management of an organization helps the firm to attract financial resources which
helps in lowering operational cost and achieving financial growth.
Organizational management can be defined as the process of managing firm’s internal
activities to ensure that activities are well controlled and managed to maintain efficiency and
consistency in corporate performances. Per the definition of the World Bank, corporate
governance is the process of managing activities of subordinates to ensure that desirable
outputs are produced to help maximize profitability for shareholders (World Bank, 2010;
Nguyen and Nguyen, 2016). In the theoretical view, corporate governance is a concept that

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falls within the paradigm of theories like the agency theory, stewardship, stakeholder theory,
separation of ownership and control. Companies are usually established with the aim of
utilizing value for shareholders. In an organization, managers are referred to as stewards,
which bring the idea of the stewardship theory. Shareholders or business owners choose
organizational managers to manage and control the resources of the organization to serve the
interest of the organization.
This also brings the assumption of the agency theory which posits that there are conflict of
interest between shareholders and managers. Nonetheless, the concept of separation of
ownership and control emerges from this perspective whereby owners are not directly
involved in the day-to-day activities of the organization. To balance this role, the BOD is
established in the organization to make sure that managers are well managed and controlled
to serve the interest of the organization nevertheless to avoid selfishness (Freeman, 1994).
The BOD is purposely held with the responsibilities of ensuring that managers serve the
interest of the shareholders so that business’s principles can be obeyed to achieve
organizational goals and objectives. Claessens and Yurtoglu (2013) explained that board of
directors helps in ensuring that corporate activities are well managed and supervised to
enhance operational performance, particularly in promoting the financial performance of the
organization. Studies have indicated that, Maxwell Communications and Polly Peck
International UK, Enron Corporation and WorldCom in the US were victims of business
collapsing as a result of weak corporate governance.
Aside this, many sectors were affected especially during the 2008 financial crisis. This has
shown that, effective management of an organization may be a factor that can contribute to

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firm growth and development. Through effective governance, managers would be able to
maximize subordinates’ efforts thus increase operational activities such as performance of job
obligations and other aspect of operation (Claessens and Yurtoglu, 2013). Due to the
importance of corporate management, most researchers have shifted attention to the study
field to help contribute knowledge on corporate management practices and its role in firms’
financial performance thus overall influence on the global economy.
Banks in Ghana over the years have experience weaknesses as a result of weak governance
and poor financial management (Bank of Ghana, 2017). Poor corporate governance is
however equivalent to organizational failure. There is therefore the need for financial
institutions to deploy effective measures and strategies to make sure that the capital structure
within the institution is well preserved and improved to help encourage management to carry
out day-to-day obligations to improve firm growth and development. Concurrently, there has
been an increase in the financial sector such that microfinance institutions have overtaken the
financial activities in the banking system. The sector has been performing adequately in the
financial market as a result improving standard of living among borrowers and other business
organizations (Heentigala, 2011). This however demands that, microfinance institutions
increase governance practices to help ensure that financial activities are managed and
controlled to avoid credit risk. Heentigala (2011) revealed that credit institutions serves as
the main source of revenue to most SMEs and therefore ensuring good governance could
have significant benefit for both the institution and the general economy. Records have
shown that Ghana has about 527 credit unions that legally registered to operate in the
country. Estimation also indicates that over 200,000 members of credit unions receive
financial aid annually (BOG, 2008). Birchall & Simmons (2009) opined that, credit unions
serves as financial tool for averting poverty and hardship in the lives of the populace. The

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author further commented on the significant role played by credit unions in the general
economy, particularly in the Ashanti Region.
1.2 Problem Statement
Good corporate governance promotes efficiency in an organization thus helps to enhance
transparency and orderliness in operational activities of firms (Nguyen and Nguyen, 2016).
Corporate governance though plays significant role in firms’ operation yet most institutions
find it very difficult in enhancing corporate management practices. Studies have shown that,
many financial institutions in Ghana have been experiencing stagnant growth due to poor
financial management and control. The banking institution is characterized with several
challenges with most specific, credit risk (Claessens and Yurtoglu, 2013; Puni, 2015; Nguyen
and Nguyen, 2016). Due to this, management of financial institutions is expected to enhance
management capabilities to ensure that all aspect of financial activities are managed to help
reduce risk. Among the strategic processes, corporate governance is one of the best
approaches that can aid firms achieve higher performance. Adequate internal structures
within corporate entities would help facilitate operational activities such as maintaining
consistency, efficiency and effectiveness. On the other hand, Puni (2015) discovered that a
corporate finance review committee does not have an important effect. He asserted that
additional costs were attributable to the establishment of executive committees, due to time
management, transport costs and the additional charges charged to committee representatives.
He found that these committee decisions can have an adverse impact on corporate results and
found that the implementation of the remuneration scheme can raise agency costs by
Kyereboa-Coleman and Amidu (2008).Given that the draft Corporate Regulations of the SEC
(2003; 2010) and the Bank of Ghana (2013) suggested that the surveillance of the
management boards should have a beneficial impact or influence on the performance of the

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company or firm as considered. (Heentigala, 2011; Ranti; 2011 Ntim, 2009; Staikouraset al.,
2008). On the other hand, weak management might result to poor performance, especially in
the financial performance of the organization. With well-developed and adequate systems,
Credit Unions would be able to control all activities related with financial flows which would
help promote transparency and adequacy in all institutional activities.
Branch and Baker (1998) indicated that implementation of corporate governance has been
one of the prior challenges facing CCUs. Despite the importance of corporate governance, its
implementation has been a major issue for most institutions, particularly the financial
institutions. Mugenyi (2010) for instance showed that, Credit Unions within the developing
countries encounter difficulties when it comes to CG implementation. Other researchers
explained that, corporate governance in concurrent running of business is more complex and
involving and due to that most firms are unable to incorporate it in their activities (Bussoli,
2013; Kim & Black, 2012; Bozec, 2005; Lam & Lee, 2012). Although, there have been
several efforts and strategies that are made to help promote the socio-economic well-being of
credit unions as well as the general economy (WOCCU, 2011). Several scholars have
explored the challenges influencing the operations of credit unions and have revealed that
implementation of CG had been a consistence challenge facing many institutions (Asiamah,
2014). BOD in this case has significant role to play in ensuring that prior to the challenges
encountering the industry proper systems are used to regulate and control the performance of
the institution. The board however may need competencies in terms of identification of areas
needed to be controlled and managed to enhance growth in order to ensure financial
performance of the firm. The Security Exchange Commission (SEC) Corporate Governance
Guidelines provides specific practices that can help improve firm performance yet the
principles and guidelines of the SEC fails to cover governance and management in CCUs.

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This however has resulted to limited governance framework for CCUs in Ghana and
therefore affecting the implementation process of corporate governance practices in CCUs in
Ghana. Liu and Fong (2010) showed that, board of directors is one of the major components
that can help promote management practices in an organization (OECD, 2010). Due to the
lack of effective governance among CCUs in Ghana, the BOD had been established in an
organization to help make sure that activities are regulated and also ensure that conflict
between shareholders and managers are resolved to help increase firm performance
(Claessens and Yurtoglu, 2013; Puni, 2015; Nguyen and Nguyen, 2016). In the light of the
above the present study is conducted to assess the impact of corporate governance on the
financial performance of Co-operative Credit Unions.
1.3 Objectives of the Study
The overarching objective of this study is to assess the impact of corporate governance on the
financial performance of Co-operative Credit Unions in selected CCUs in the Ashanti Region
over the period of 2011-2018. Specifically, the study sought to:
1. Examine the relationship between board size and the financial performance of CCUs
in Ashanti Region
2. Investigate the relationship between board composition and the financial performance
of CCUs in Ashanti Region
3. Assess the influence of the role of board audit/supervisory committees on the
financial performance of CCUs in Ashanti Region
1.4 Research Questions
To achieve the stated objectives, the following are the main guiding questions for the study.
1. To what extent (if any) does board size affect the financial performance of the
selected CCUs in Ashanti Region?

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2. Does the presence of board composition affect the financial performance of the
selected CCUs in the Ashanti Region?
3. Is there a significant relationship between the role of board audit/supervisory
committees and the financial performance of the selected CCUs in the Ashanti
Region?
1.5 Significance of Study
This study would provide adequate knowledge on corporate governance practices and how its
implementation can be improved among CCUs in the Ashanti Region. Besides, microfinance
institutions would benefit from the study developing appropriate mechanisms and
incorporating the suggestions of the study to achieve operational effectiveness. Also, the
study would serve as a caution for policy makers to formulate adequate and effective
financial policies to help regulate the operations of Credit Unions to help maximize output.
Lastly, study would serve as future evidence to aid up-coming researchers to carry out their
research works in related field.
1.6 Scope of the Study
The study purposely focused on the level of corporate governance practices among forty
three (43) selected CCU’s in the Ashanti Region. Contextually, study explored the
association between the size, composition and board audit committees and financial
performance of the selected CCUs in the Ashanti Region with the year period 2011 to 2018.
Study employed specific performance indicator which was firm profitability (i.e. return on
assets, return on equity). Study used board size, composition and roles of the board audit
committee as the independent variables whereas profitability was employed as the dependent
variable.

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1.7 Limitations of Study
Geographically, study was limited to the Ashanti Region. Also, findings of the study could
not be generalized since it was limited to forty three (43) CCUs in the Ashanti Region. Study
also found some constraints associated with the data gathering process. This was because
some CCUs were not willing to provide the needed time series data.
1.8 Organisation of the Study
The study was organized into five chapters. Chapter one presented the background of the
study, problem statement, objectives, research questions, scope and limitation. Chapter two
covered the literature review of the various concepts including theoretical reviews,
conceptual framework and Empirical reviews. Chapter three provided the methodological
approach adopted for the study. Chapter four also contained the data analysis, presentation
and discussion of findings and the Chapter five concluded with summary of findings,
conclusions and recommendations of the study.

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CHAPTER TWO
LITERATURE REVIEW
2.0. Introduction
In this section, the appropriate literature on the general theory and also the system that
enhances governance of corporate or firms are been reviewed in this chapter. Different
theoretical principles of corporate governance, together with several empirical researches on
the effect of corporate governance on the results of CCUs, with independent variables such as
profitability, credit quality and yield on capital (ROE), are evaluated using corporate
stewardship factors of Board magnitude, structure, and committees are all recognized in this
chapter also.
2.1 Theoretical Framework of Corporate Governance
Several theories have been developed which relate to corporate governance. But the various
theories differ in terms of framework approaches and perspectives. Corporate governance has
been defined by several authors in different ways and approaches. Although, there are
different perspectives and approaches which relate to corporate governance yet each
framework shares some significant similarities since each assumption attempts to identify and
analyze the same situation but from different angles. In this study specifically, the researcher
chose to focus on only three theories and they were the Agency Theory, Stewardship Theory
and Stakeholder Theory.
2.1.1 Agency Theory
This theory was developed by Alchian and Demsetz (1972) which was furthered by Jensen
and Meckling (1976). Formally, corporate governance was meant to help increase firms’
profitability yields in order to enhance the value created for shareholders. Ross (1973) in the

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explanation process indicated that the agency theory exists to reveal the problems associated
with agencies. Jensen and Meckling (1976) defined agency problem as the contradicting of
interest between business owners and managers. Agency problems normally occur when
there are conflict of interest between managers and shareholders. Shleifer and Vishny (1997)
pointed that, agency problems are mostly concern with the relationships between managers
and shareholders. According to Jensen and Meckling (1976), agency formation is a type of
contract whereby shareholders chooses managers to manage and control the resources of the
company with the main intent of increasing shareholders’ value. In this way, the shareholders
are referred to as principals whereas officers or directors within the organization are
constituted as the agents. The theory holds that, managers’ main objective in the business is
to maximize profit while increasing operational performance.
2.1.2 Stewardship Theory
Stewardship theory was framed by Davis et al (1997) and was based on two main
components and these were sociology and psychology. According to Davis et al (1997)
stewardship is the process of controlling, managing and ensuring that business activities are
promoted to help increase profitability and growth. In the business level, managers are
referred to as stewards since they are chosen by shareholders to control and manage the
resources of the company. The stewardship theory specifically holds that, resources of a
company is generally managed and controlled by managers to ensure that value is maximized
to achieve satisfaction (Otieno et al. 2015). Daily et al. (2003) indicated that managers are
expected to safeguard their integrity by making sure that they increase commitment towards
organizational activities in order to enhance maximized financial performance and
shareholders’ value. Since managers are recognized as stewards of company resources, it is

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important that they put in maximum effort to control and manage internal resources to
enhance operational performance.
2.1.3 Stakeholders Theory
The stakeholders’ theory was formally introduced by Freeman (1984) who indicated that, the
activities of stakeholders could have significant impact on firm performance. Stakeholders
here constitutes all individuals whose involvement in business operation has direct impact on
the activities of the industry (Ayuso and Argandona, 2007). Generally, stakeholders have
important role in firms’ activities, particularly internal stakeholders such as employees. Firm
growth and development specifically depends on the working abilities and capability of
employees. Therefore, management is responsible for ensuring all internal operations are
managed and controlled to achieve business success such as increasing profitability and
satisfaction. Wheeler et al, (2002) otherwise indicated that the stakeholder theory is a theory
examines the relationships between managers and business partners. Per the view of Freeman
(1999), the stewardship theory is very important in the business paradigm as it presents best
forms of practices to help increase performance.
2.2 Empirical Review
2.2.1 Board Size and Financial Performance
Wang et al, (2012) over the period of 3 years thus between 2005 to 2007 studied the
relationship board size has with the performance of companies between 68 banking firms
within the United State where the results showed a negative relation between both the board
size and the advantages of the bank in terms of profits. This concept can be described by the
point that increase of the board size points out to an increase also in the problems of the
agency which all makes it a point for the board to be less effective. Wider and broader boards

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are more had to tackle in terms of manipulation and may sometimes encounter most issues
with participation, organization, communication, providing bad general reports on finances
and also reducing the performance of corporate firms (Canyon & Peck, 1998, Mak &
Kusnadi, 2005; Einsenberg et al, 1998). According to Pathan, (2009) in his survey that
showed a negative relation between board size and the capability of taking in risk, he
extracted the data used from 212 wide banking firms of the United State between the periods
of 1997 to 2004 and other more banking risk indicators. According to Minton et al, (2010), he
suggested that between the periods of non-crisis a negative relationship was found between
the board size and the performance of banking firms as reported.
According to Berger et al, (2012), the utilization of the sample of information which was
extracted from over 85 non-payable and 243 payable banking firms within the United States
between the periods of 2007 to 2010 showed a negative relationship as its findings but also an
irrelevant or unimportance between the board size and the advantages associated with non-
payables in terms of profits. The perception that companies recognized with a large or wide
board size are known to be inefficient and also ineffective were supported and as a result
unable to be decisive in terms of suggestion or decision making on the point that enough and
also more managers are noticed to be incompetent for effective interaction and may leave a
burden and problems to its workers or members. It was stated that how larger or wider the
size of the board determines the highest rate of expansion that can be extracted, and also
helps in making decisions within corporate firms mostly with the existence of foreign
directors included within the board.
With regard to the empirical studies, the second aspect also suggested that board size has a
positive relation with the performance of corporate finances (Sheikh et al, 2012, Adam and

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Mehran, 2012; Kajola, 2008; Sanda et al, 2010; Coles et al, 2008). According to Sheikh et al,
(2008), when there is an increase in board size, there is also a favourable respond effectively
in the market. It was found that most large board size ensures effective supervision for
corporate firms with an operating performance recognized to be poor as a result to their
categories of the base and skills for communication as well. Mak and Lin (2005) conducted a
survey using the information extracted from over 147 corporate firms within Singapore and
found a positive effect or influence between board size and the performance of firms as well
between the periods of 1995-1999. All these findings forms the base that larger boards tend to
have wider access as compared to the smaller boards to the general sector by giving and
ensuring good opportunities for a corporate firm to possess a resource of finance and other
extracted materials as well.
According to Setia et al, (2009), it was debated that there is a potential for larger board size to
increase the performance of finances because they possess all kinds of experiences and skills
which helps them in implementing better suggestions in terms of decision making (Setia-
Atmaja et al, 2009). Stepanova & Ivantsova, (2012) also highlighted on the fact that, there is
a difference between banking firms and other sector firms, meaning further acquisitioned
skills, knowledge-know-how that is offered by broad boards which also brings about the
betterment of the performance of banking firms. Sanda et al. (2010) also discovered that the
sample of 93 Nigerian companies mentioned from 1996 to 1999 had a favorable relationship
between board size and strong profitability under the proxy of equity return (ROE). Adams
and Mehran (2012) have discovered that panel size has a strong connection with results based
on a sample of information from US bank owning firms over a span of 34 years as
represented in Tobin's Q. They claimed that panel size rises are essential because of addition
of the managers who also have members of the subsidiary committee. Furthermore, Aebi et

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al. (2012) found that committee volume is favorably linked to the efficiency indices of 372
American companies assessed by purchasing and holding and ROE over 2007-2008.
Mangena and Tauringana (2008) recorded a favorable link between the magnitude of the
panel and their financial results in an area of serious political and economic confusion with a
sample of 72 companies mentioned in Zimbabwe from 2002 to 2004. In a sample of Nigeria's
23 businesses mentioned between 2000 and 2006 (Return on the Capital Worked), Kajola
(2008) has found beneficial relationships between committee volume and economic results. ).
Dalton and Dalton (2005); Klein (2002) took a view to promoting variety in big boards,
which provides the company a competitive edge in distinct areas of knowledge, experience,
competence, resource co-optation abilities, corporate-strategic development, creativity, and
wide-ranging service delivery. It was stated in other studies that bigger committees are
positive for greater financial efficiency (Pearce & Zahra, 1992), and that more extensive
committees may employ managers with appropriate and supplementary knowledge and
expertise, and thus derive their knowledge and abilities from a wider spectrum (Van de
Berghe & Levrau, 2004).
Furthermore, Jackling and Johl (2009) claimed that a large board improve the value and
efficiency of policy choices, as it increases academic understanding. This provides empirical
support for Tornyeva and Wereko's (2012) past research in Ghana. They asserted that
reducing the volume of the board helps to avoid issues for the drivers or bad co-operation and
communication resulting from large panels. As the magnitude of the committee improves the
co-ordination problems, resulting in communication, the board's capacity to monitor
management decreases and thus the issue of agencies decreases. They also note the bulk of
the banking councils are dominated by families, control or principal shareholders that impairs
the method of autonomous judgment.

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2.2.2 Board composition and financial performance relationship
External committees dominated by executives or not corporate managers have a positive
effect on corporate results which were found within the premier empirical literature (al-
Sahafietal., 2015; al-Hawary (2011); Yesser et al., (2011) Cho and Kim, 2007; Bino and
Tomar, (2007). Yasser et al. (2011) provided proof that corporate governance has a positive
impact on financial results of 792 Pakistani corporations mentioned in the Karashi Stock
Exchange during the era 2003-2008. Trabelssi (2010) also in his studies encountered an
important beneficial connection between non-managing director’s ratio and corporate results
in Tobin’s Q and ROA between the periods of 1997 to 2007on the basis of a sample of
Tunisian commercial banks.In a study of roughly 300 openly traded U.S. companies, Cornett
et al., (2010) examined the relations between multiple commercial and bank efficiency
processes in the 2007-2008 financial crisis. More external or autonomous managers were
discovered to be favorably linked to companies ' results during the 2007 recession. In the
same way, Cho & Kim (2007) showed that the attendance level from the outside managers
was important, with positive relation with ROA's corporate results, in samples of 347
registered companies from Korea during 1999.
Gordini (2012), through their inputs, such as abilities, perceptions and their links to internal
assets, revealed a favorable connection between non-Executive Directors and corporate
efficiency. The more external committee members the higher the proportion will lead in
stronger business results and bring importance to the business. The results are compatible
with agency theory and resource dependence theory, which is that non-management
managers are efficient controls and a disciplinary tool for organizational conduct. Erkens et
al, (2012) after using the information extracted from over 296 large banking firms to conduct
the study, a positive relation was found between unauthorized directors and the level of

16
equity within the periods of 2004 to 2008. If non- management's presence on the committee
increases surveillance efficiency, the company's output should be enhanced. The board's
independence is increased by having a greater share of external managers.
2.2.3 Board committees (audit/supervisory committee) and financial performance
relationship
In this section, it was found that empirical literacy’s on board-to-business relations are
blended (Claessens and Yurtoglu, 2013; Puni, 2015; Nguyen and Nguyen, 2016; Bussoli,
2013; Kim & Black, 2012; Bozec, 2005; Lam & Lee, 2012; Klein, 1998; Kajola, 2008). A
favorable connection between panel members and economic results is suggested by the first
empirical plotting (Wild, 1994, Liang & Weir, 1999, Vefaes, 1999b; Black & Kim, 2012;
Bussoli, 2013; Puni, 2015; Yung & Bucholtz, 2010). Wild (1994) examined the reactions on
the market before and after the establishment of audit committees, using a sample of 260 US
firms listed between 1966 and 1980. After the institution of audit boards it revealed that the
attendance of audit committees can enhance management accountability for shareholders by
statistically significant improvements in stock yields.
Main and Johnson (1993) examined the position of salary boards in UK boardrooms in a
sample of 220 big, UK businesses mentioned and reported that the existence of a higher-
paying remuneration board positively impacts on shareholder value and corporate efficiency.
The second strand of empirical research indicates a detrimental effect on strong economic
results from the attendance of the committee members (Main and Johnson 1993; Vafaes
1999; Bozec 2005; Lam and Lee, 2012). Vafaes (1999) in his study used the data extracted
from the listed 307 companies from the year 1990 to 1994 and showed that there is a negative
relation between the members of the committee of board such as audits, remuneration and

17
selection and also the performance of corporate finance. These surveys showed that the
committees can impinge upon and dilute the duties taking by the executives or can pre-empt
leadership accountability and sometimes the committees are used for confirming leadership
choices with a rubber stamp.
These surveys revealed that committees may interfere with and dilute Executive Authority
duties (Rainsburys et al., 2008; Barker 2002) and those committees are sometimes used as a
rubber stamp in order to verify leadership choices. They also have the capacity to pre-empt
leadership accountability. Puni (2015) discovered an adverse connection between
appointment committee and corporate financial results using sampled information from 31
coded firms at the Ghana Stock Exchange between 2006 and 2010. Initially, they argued that
the formation of executive committees imposes additional costs for the committee employees
in terms of management movement, transport and additional compensation (Vefeas, 1999).
Second, the unnecessary management monitoring that can lead to the panel members are
detrimental to the executive strategy and perspective (Goodstein et al. 1994, Vefeas 1998).
This will imply extra expenses for companies. Empirical findings between executive
members and bank performances have been combined with particular references to the
banking industries. Most of the current bank research indicates a considerably favorable
connection between executive members and the profitability of the companies.
Owusu (2012) also discovered that the audit boards of the Ghanaian registered companies
were statistically small but linked to ROA. They found that by performing particular tasks,
the presence of executive members could enhance financial accounts, legitimacy and
credibility. In this regard, the tasks of these executive committees may minimize issues for

18
the organization with the eventual enhancement in company results considering the
concentration of this thesis on inspection, danger, remuneration and appointment boards.
On the other hand, Puni (2015) discovered that a corporate finance review committee does
not have an important effect. He asserted that additional costs were attributable to the
establishment of executive committees, due to time management, transport costs and the
additional charges charged to committee representatives. He found that these committee
decisions can have an adverse impact on corporate results and found that the implementation
of the remuneration scheme can raise agency costs by Kyereboa-Coleman and Amidu
(2008).Given that the draft Corporate Regulations of the SEC (2003; 2010) and the Bank of
Ghana (2013) suggested that the surveillance of the management boards should have a
beneficial impact or influence on the performance of the company or firm as considered.
(Heentigala, 2011; Ranti; 2011 Ntim, 2009; Staikouraset al., 2008; Claessens and Yurtoglu,
2013; Puni, 2015; Nguyen and Nguyen, 2016).
2.3 Conceptual Framework
2.3.1 Concept of Corporate Governance
For the previous years, it is recognized very often that corporate governance has developed
and become very known to the public and at the same time gained interest in the fields of
academics, administrators, and also practitioner towns and communities. With regard to this,
over the years most literatures have been extracted from the subject and the perceptions of
debating about the governance of corporate firms either good or bad (Amann, 2008). Rezaee
(2009) suggested that most people from different areas to use the theory or concept but still it
is not globally accepted as the explanation for corporate governance. Keasy et al, (1997) also
in their study stated that the use ‘corporate governance’ as a term is not dominant or

19
prominence by most researchers’ and were not capable in suggesting any acceptable fact on
the description. The hardened situation of describing the concept of corporate governance
with regard to the continuous expansion of the boarders of the subject been emphasized is
been underrated in this study (Rooche, 2005). Readily, a significant follow-up to encourage
the concept of corporate governance is to analyze some of the classifications of the
definitions as the first step in order to create an idea of how the term corporate governance is
been used.
It was also noticed that there are many and different definitions that is extracted to be the
definition for “corporate governance”, here the researcher’s classified or group all the
definitions and other descriptions into a “simple” and “broad” groups of identifications
(Claessens and Yurtoglu, 2013). Salacuse, (2002) also suggested that the idea of classifying
term ‘corporate governance’ could be defined mostly on two facts thus either ‘simple’ or
“broad’ ” as defined by different researchers and students depending on the educational stand
of the individual. Claessens and Yurtoglu, 2013 as cited in Nguyen and Nguyen, (2016)
indicated that the above definitions however, does not present general benefits since
corporate governance can be defined in several ways and that previous definitions focused on
how corporate governance could impact financial performance of firms.
2.3.2 Corporate Governance from Narrow Perspective
In this section, it is prominent that the definition set across by the Cadbury Committee still
remains as one of the commonly recognized definitions. With regard to the definition of
corporate governance set across by Cadbury Committee Report (1992), it described it to be a
process that helps business firms in terms of directions and manipulation and it also
suggested that the general board of governance often identified as administrators are in

20
charge of the governance of the particular corporation. The partners of that corporation are to
choose and appoint the directors and other corporate performance checkers (auditors) with
the purpose of the firm to reach their expectations or satisfaction as wanted. Moreover, it was
again defined by Shliefer and Vishny (1997) broadly as the methods and procedures
implemented by shareholders and partners with the ambition of generating investment on
themselves as a corporate firm or organization. Furthermore, a collection of ways whereby
non-partners or outsiders who engage themselves in the investing of other project utilize
some ways to protect themselves from any form of problem within the corporation can be
described as corporate governance (La porta et al, 2000). Tirole, (2001) also described
corporate governance as the potential strategy for an organization to impose ways of
managing the internal situations of the stakeholders as well.
Claessens and Yurtoglu (2013) stated that the suggested definition for corporate governance
in the concept simply is exposed and showed as a tool that promotes effective and efficient
performance with the aim of increasing the number of shareholders or partners within the
corporate firm. It can be extracted that ideas for all the explanations are all mainly from the
idea or perception of the agency where the responsibility or function of the manager is
generally for the protection of the shareholders or partners. Among all stakeholders or
partners, the significant or vital one that is the employees, purchasers, government, the
community with a specific interest and functions for the corporation are not even dedicated.
A highlight is made on the governing terms thus rules within the markets capitally on the
reason of managing the investments and the suggested industries as well. This involves rules
of accounting, disclosure, arrangement of deals, lists of requirements, and finally
safeguarding of the right and privilege of small shareholders or partners.

21
2.3.3 Corporate Governance from Broader Perspective
A complex definition was suggested by the Organisation for Economic Co-operation and
Development (OECD) and it was defined as follows: Co-operative governance include a
collection of association between the management board of a company and its other hands
thus the stakeholders and partners as well. It also ensures that the function through which the
set of aim of the organisations are implemented and the ways of achieving those suggested
aim and also the supervision of the performance as well (OECD, 2004). Becht et al, (2002)
also explained the following as corporate governance; the reconstructing of the problems of
the gathered activities between isolated investors and the settlement of conflicts of
understanding between the various forms of stakeholders or partners within a corporate firm
are taking into consideration as corporate governance (Becht et al, 2002).
Corporate governance also can be defined as the interaction between the management, board
of directors and authorized executives, partners and shareholders and other recognized
authorities of the firm. This interactions serves to ensure that a construct of which the
objectives or aim of the corporate firm are established and also supervised on the
performance as well (Mehran 2003). Moreover, corporate governance can be defined as the
private or public organisations, which involves law, regulations and other form of accepted
methods which will manage the interaction together, in the economy of trading between other
corporate managers and directors of Small Scale Enterprises (Oman, 2001). With reference to
the suggested definition above, it can be noticed that there is a boundary which gives out the
description of the interaction that exist among the board, authorities, management,
shareholders and other partners as well. Nguyen et al, (2016) for exemplary accepts the fact
that the definition suggested by the Organisation for Economic Co-operation and
Development thus the (OECD) does not emphasized on only the tools for the governance of

22
corporation internally but also takes into consideration of the external tools for the
governance of a corporate with the idea of other partners like stakeholders.
2.3.4 Corporate Governance Mechanisms
Corporate governance can be integrated into different mechanisms and these mechanisms are
internal mechanisms and external mechanisms. Generally, there are two main types of
corporate governance practices, internal governance and external governance. The internal
governance is the process of ensuring that internal activities such as financial flows are well
managed and controlled to achieve growth and development. As per the agency theory, the
main objective of managers is to maximize shareholders’ output through effective
management and adequate utilization of internal resources (Jensen, 1993). Some examples of
internal controlling mechanisms include formulation of financial policies, effectiveness of
board of directors, structures for compensation and among others (Agrawal and Knoeber,
1996; Dennis and McConnel, 2003). Keasey and Wright (1997) indicated that the best form
of internal control mechanisms are ownership structure, board structure, information
processes and CEO duality.
On the other hand, external control is management measures taken to ensure that external
mechanisms such as commercial activities like marketing are regulated to achieve
performance (Bushman and Smith, 2001). External mechanisms can also refer to the external
laws that are regulating the banking firms in relation to their external environment. External
control mechanisms normally protect and maintain conducive environment for all participants
within the business environment, particularly the banking industries. Hassan (2009) revealed
from studies in Australia that corporate governance had significant impact on firm
performance and that governance mechanisms used by the companies were mainly in three

23
groups and they were mechanisms that dealt with board size, CEO tenure, CEO
remuneration, government regulations which forms part of the external mechanisms and
among other. Overall, corporate governance practices was revealed to be having positive
impact on firms’ financial performance of CCUs and that good corporate governance helps to
promote efficiency, effectiveness and transparency in all aspect of operation including
corporate relationships (Heracleous, 2001).
2.3.5 Board of Directors
Board of directors play significant role in the operations of an organization. In the actual
sense, the BOD is established in an organization to help serve as mechanism for management,
monitoring and making appraisals on the activities of management. As shown by the agency
theory, managers are obliged to fulfil the interest of business owners and therefore are
accountable and responsible to the shareholders. Originally, the board is responsible for
ensuring that monitoring systems are well improved in the organization to enhance accuracy
and efficiency in all aspect of operation, especially making managers fulfil the interest of the
shareholders (Jensen and Meckling, 1976).
Eventually, the decreasing of the cost involved in agencies to be included in the function of
increasing the value of shareholders and other partners is the sole accountability of the
leaders within the firm. The members of board of directors are the head of the systematic
control system of corporate firms, which has it prior function to supervise all agents in terms
of management on behalf of the shareholders and other partners that chooses and make its
selection of members on its own. When management exert power and control, less chance
executives (officers) do not work on maximizing employee importance (Liu and Fong, 2010).
The better the committee practices control of management. The Management Board is

24
therefore mainly a surveillance system to safeguard the rights of managers (Jensen and
Meckling 1976). In general, an autonomous Board is regarded as an effective governance
system, since its autonomous leadership significantly improves the Board's capacity to
practice its role of oversight in favor of the previous directors (Liu and Fong, 2010). The
Board is thus empowered to participate, reject and reward senior executives, to ratify and
monitor significant choices, to guarantee that they are pursued in the Executive Director's
concerns (Fama and Jensen 1983; Gillan, 2006; Yermack, 1996; booth et al., 2002;
Baranchuk and Dybvig, 2009). Fama (1980) suggested that a recognized vital device used in
examining corporate firms in decision making is the board of directors.
In the composition of the committees, Solomon (2010) suggested a few values which should
be followed: gathering commonly, efficient communication between employees and
shareholders, readiness to reflect suggestions from one another, elevated standard of trust,
worry about economic hazards and knowledge and rationality in resolving economic issues
and taking any path of intervention. From the perspective of a company concept, the function
of the Board of Directors is to provide the most efficient instrument for achieving corporate
governance that safeguards their rights (Fama, 1980). Walker (2005) indicated that the
suitable appointment and reward of managers are a major consideration to be provided when
building a panel framework. A board's efficacy is evaluated to the degree to which it gives
the business importance. The committee should establish economic goals of the business,
guarantee that the required funds for the business to fulfill its goals are put into position and
the leadership output should be reviewed. The committee should establish values and norms
for the company and guarantee understanding of its responsibilities to its shareholders and
others (Combined Code of the United Kingdom, 2016).

25
2.3.6 Financial Performance
In various studies, the assessment of the performance of firms is done indifferent ways that
would aid in examining and achieving the measurement required (Cochran & Wood, 1984;
Ittner and Larcher, 2003). Devices that were used in the measurement of the performance of
corporate firms where most studies adopted the use of Tobin’s Q the measurement of the
performance of the firms (Managena et al., 2012; Trabelssi, 2010; Al-Hawary, 2011;
Bino&Tomar, 2007), ROA ( Heentigala, 2011; Ranti; 2011 Ntim, 2009; Staikouraset al.,
2008), ROE (Baussaad and Karmani, 2015; Wiredu et al., 2014; Gordini, 2014). The
measures listed above in the study can be classified and grouped into two main divisions:
thus on-hand marketing, and accounting with regard to the other.
Daily and Dalton (2003) stated that the present performance of finance with corporate
organisations can be measured based on accounting, as well as, the perception of
shareholders of the firm as measured by on market-based systems. Haniffa and Huduiab
(2006) stated that there is no existence of understanding within the literature on which the
appropriate indicator is used in measuring the performance of finances within corporate
firms. Furthermore, the study exposed that, is the possession of strength and weakness within
every measure that is used in measuring the performance of finances within corporate firms
and also enumerated that there is no required measurement that will help attain the best rate
for the performance of financial firms.
In the framework of emerging markets where most companies have debt funding rather than
equity funding, market-based indicators of company results are especially problem-set. The
market share price of companies shows their market value, as a result of the Efficient Market
Hypothesis (Gomperet al., 2003). In this regard, the capital market is effective. Ghana is one
of the developing countries where the stock market in developed economies is yet to develop

26
in a similar way with established nations. For example, after a lag that occurs in stock rates,
the effects of openly revealed and accessible data will impact the industry. However, business
evaluations are susceptible to fluctuations beyond management control, such as modifications
in market value and inventory decreases (Grossman & Hoskisson, 1998). The financial output
of financial markets has a good deal of inner command. Black et al., 2006, further argues that
the economic estimates by externals on the governance structures constitute market-based
policies such as Tobin's Q. The Q proportions of Tobin used as proxies for price oriented
actions are described as the equity market value separated by substitute costs (Yermach,
1996).
During the examination of company results, different scientists have noted out the benefits of
using accounting-based measures (ROA and ROE). The ROA is the general net profit divided
by a total book value of the total assets, while the ROE defined by Zemzem&Kacem as the
total net income dividable by the book value of the equity. The ROE is defined in 2007 as
total net income. In general, increased ROA and ROE indicate the efficient use by leadership
of company assets and shares to increase the shareholder assets. In the beginning, Ross et al.
(2008) stated that the use of accounting actions was historical. Krivogorsky (2006) said that
accounting policies had their roots in historical cost accounting. It was asserted that they
would be an important element of accounting policies. Second, the accountable measures are
susceptible to change and modification in the billing methods, methods and practices, argued
by Alexander et al. (2007) and Mangena and Tauringana (2007). Ross et al. (2008) find out,
finally, that accounting actions ignore danger. Despite the weaknesses of the accounts, ROA
and ROE are regarded important from the title of perspective of the shareholder because they
concentrate on returns for shareholders and property. Accounting measures such as ROA and
ROE relate straight to the ability of management to use company resources effectively.

27
A major problem with Tobin's Q measure is that a significant proportion of universal bank
shares are not counted on the Ghana Stock Exchange and cannot be traded free of charge and
are thus not listed on the exchange during the exchange phases. In light of this restriction, we
take accounting steps as ROA and ROE proxies for bank economic performance. Return of
investments is an indication of the company's profitability, the efficiency and sometimes
referred to as transfer on the equity, by using its resources to produce income. The net
company revenue is divided by its complete wealth:
Return on Asset (ROA) = (Net Income/ Total Assets)
Kyereboa- coleman & Biekpe (2006) suggested that full revenue as the value for notes for
complete resources and is regarded as the main instrument for measuring the performance of
corporate firms. This proportion used as leverage for the performance of corporate firms (e.g.
Lam and Lee, 2008)
Return on Equity = (Net Income)/ (total Equity)
The ROE definition for Zemzem & Kacem (2014) is the actual revenue split by publication
significance. Return on equity estimates a company's profit by exposing the quantity of profit
produced from an investor's cash. The calculations are based on the division of the net
income of a business by its complete capital. It's called Net Worth Return. All economic data
relating to ROA and ROE factors is extracted from the quarterly accounts supplied by the
bank.

28
2.3.7 Conceptual Framework
Author’s Construct
The central assumption of this study is that corporate governance impact on the financial
performance of Co-operative Credit Unions in the Ashanti. The following variables were
used as proxies for corporate governance: Board Composition, Board Size, Director
Remuneration/Fee, Number of Board Meetings and Number of Internal Audit Meeting.
Moreover, Return on Assets and Return on equity was used as proxies for financial
performance. These relationships are empirically supported. Owusu (2012) discovered that
the audit boards of the Ghanaian registered companies were statistically small but linked to
ROA. They found that by performing particular tasks, the presence of executive members
could enhance financial accounts, legitimacy and credibility. On the other hand, Puni (2015)
discovered that a corporate finance review committee does not have an important effect. He
asserted that additional costs were attributable to the establishment of executive committees,
due to time management, transport costs and the additional charges charged to committee
representatives.
Board Composition
Board Size
Director Remuneration/Fee
Number of Board Meetings
Number of Internal Audit
Meeting
Return on Assets
Return on equity

29
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
This very section presents the methodological process adopted for the study. The main
composition of this chapter include the Research design, Population and sampling, Data
source, Data analysis and presentation, Model specification, Ethical consideration and Study
area.
3.1 Research Design
The study employed quantitative research approach and explanatory design. The study used
these research designs due to their appropriateness to the research’s objective. Kothari (2014)
showed that explanatory research design is a type of research design that examines the cause
and effect association between variables used in the study. Therefore in order to achieve the
objective of this study (impact of corporate governance on financial performance of selected
CCUs in the Ashanti Region), the researcher employed the explanatory design to help both
examine and explore the association between the two variables (corporate governance and
financial performance) as well the effect of corporate governance on financial performance.
3.2 Population and Sampling
The population of this study comprised of 43 accredited CCUs in the Ashanti region of
Ghana. However, 19 CCUs were selected for the study due to availability of time series data
covering the period 2011 to 2018. The CCUs were selected based on their ability to provide
the required time series data covering the 8years period.

30
3.3 Data Sources
Study employed secondary data in carrying out the study focusing on variables like board
size, board composition and board auditsupervisory committees. The secondary data was
extracted from an existing data of financial statements and annual reports of selected CCUs in
the Ashanti Region. The researcher conducted a pretesting of the data to ensure accuracy and
reliability thus avoiding all forms of bias to the study. Again, Breusch-Pagan-Godfrey
Heteroscedasticity LM Test was adopted in this study to test for presence of
Heteroscedasticity on the study Breusch-Godfrey Serial Correlation LM Test was adopted in
this study to test for presence of Serial Correlations on the study to ensure that data was valid
and this was performed to help ensure that the study’s objectives had been explored.
3.4 Data Analysis and Presentation
Kothari (2004) explained that, data analysis is the process of examining or analyzing a given
study data to support research objectives. In this study specifically, secondary data was used.
Validity and reliability tests were conducted to determine the accuracy and adequacy of the
data. Study also used both frequencies and econometrics in the data analysis and this was
based on panel which stretched from 2011-2018. This was used to measure the impact of
corporate governance practices on financial performance of CCUs in the Ashanti Region.
EVIEWS version 10 software packages and the Statistical Package for Social Science (SPSS)
analytical tools were used for the data analysis. Diagnostic tests were also conducted in the
study. Breusch-Pagan-Godfrey Heteroscedasticity LM Test was adopted in this study to test
for presence of Heteroscedasticity on the study Breusch-Godfrey Serial Correlation LM Test
was adopted in this study to test for presence of Serial Correlations on the study. Results were
presented using tables while each parameter was related to the literature.

31
3.5 Model Specifications and Descriptions of Variables
The main aim of the study is to assess the impact of corporate governance on financial
performance of selected co-operative credit unions in the Ashanti Region. Financial
performance was measured using ROE and ROA and thus financial performance was the
dependent variable while corporate governance like board size, board composition
(segregated into; inside board, and outside board), board audit, and board meeting served as
the independent variables.
Board Size - Is measured as the number of people that constitute the board of a credit union
Board Diversity - Is measured as the number of female on the board of a credit union
compared to males
Non-Executive Directors to ED Ratio - Is measured as the number of non-executive directors
to Executive directors on the board of a credit union
Number of Board meetings - Is measured as the number of meetings held by the board
members in year
Directors Remuneration - Is measured as the total amount spent on the directors within a year
in the form of remuneration
Number of Internal Audit Committee Members - Is measured as the number of internal audit
committee members
Yit= βo + βXit + εit
Where: - Yit is the dependent variable for firm ‘i’ in year ‘t’, β0 is the constant term, β is the
coefficient of the independent variables of the study, Xit is the independent variable for firm
‘i’ in year ‘t’ and εit the normal error term. Accordingly, the estimated models used in this
study are modified and presented as follow;

32
FPit= β0 + β1(BZ)it + β2(IB)it + β3(OB)it + β4(BA)it + β5(BM)it + εit
Where; β0 is an interceptβ1, β2, β3, β4,and β5, represent estimated coefficient for specific
credit union at time t. FP, BZ, IB, OB, BA, and BM represents Financial Performance, Board
Size, Inside Board, Outside Board, Board Audit, and Board Meeting respectively. εit
represents error terms for intentionally/unintentionally omitted or added variables. It has zero
mean, constant variance and non- auto correlated. The coefficients of explanatory variable
were estimated by the use of ordinary least square (OLS) technique.
3.6 Ethical Consideration
The researcher made sure that respondents’ security was firm since various credit unions
were asked to reveal or present their financial reports. Prior to this, letters were sent to the
sampled credit unions two weeks before data were accumulated. This allowed the
management to have much time to decide as to whether to partake in the study or not. Also,
managements were made aware that the information gathered was only to serve academic
purpose.
3.7 Study Area
The researcher purposely conducted the study in 43 selected CCUs operating within the
Ashanti Region which had the most number of credit unions of about 60 as shown by the then
Ashanti Regional director of co-operatives, Mr. Amoateng Philips who was personally
interviewed by the Ghana News Agency on April 5, 2008 (https://www.ghanaweb.com).
Presently, 73 out of the 527 CCUs are situated in the Ashanti Region. Study focused on the
CCUs within the Ashanti Region because Ashanti Region is concurrently the second most
populace area in Ghana with Kumasi as the capital. Kumasi has been one of the places that

33
have high commercial activities and also an area for migrants and other commercials
(https://www.ghanaweb.com).

34
CHAPTER FOUR
DATA PRESENTATION, ANALYSES AND DISCUSSIONS OF FINDINGS
4.0 Introduction
This chapter presents and discusses the results of the study which is aimed to assess the
impact of corporate governance on the financial performance of Co-operative Credit Unions
in selected CCUs in the Ashanti Region over the period of 2011-2018. Diagnostics analyses
have been performed by assessing the presences of normality, Heteroscedascity and
multicollinearity
4.1 Description of Variables in the Model
All the variables in the study have been described using means, standard deviations,
maximum values, minimum values, skewness and kurtosis
Table 4.1: Descriptive Statistics
ROE BC BS DR NBM NIAC NIAM ROA
Mean 112 1.60 6.57 120 11.10 2.55 17.03 488
Median 163 1.00 7.00 554 11.00 3.00 12.00 166
Maximum 144 4.00 10.00 820 28.00 4.00 135 378
Minimum -264 0.00 4.00 0.00 1.00 0.00 0.00 0.00
Std. Dev 211 1.01 1.33 165 4.33 0.94 17.93 710
Skewness 3.31 0.65 0.41 1.89 0.97 -1.41 2.85 2.08
Kurtosis 16.98 3.07 2.73 6.19 4.87 4.92 15.80 7.36
Observations 152 152 152 152 152 152 152 152
ROE=Return on Equity; BC=Board Composition; BS=Board Size; DR=Director Remuneration/Fee;
NBM=Number of Board Meetings; NIAC=Number of Internal Audit Committee; NIAM=Number of Internal
Audit Meeting; ROA=Return on Asset
As presented in table 4.1 return on equity recorded a mean of 112, standard deviation of 211,
skewness for 3.31 and kurtosis of 16.98. Also, board composition recorded a mean score of
1.60, standard deviation of 1.01, skewness of 0.65 and kurtosis of 3.07. Furtherance, a mean
score of 6.57, standard deviation of 1.33, skewness of 0.41 and kurtosis of 2.73 was recorded
for board size. Again, director remuneration/fee recorded a mean score of 120, a standard

35
deviation of 165, skewness of 1.89 and kurtosis of 6.19. Number of board meeting had a
mean score of 11.10 and standard deviation of 4.33. Skewness and kurtosis recorded under
number of board meeting were 0.97 and 4.87 respectively. Moreover, number of internal
audit committee recorded a mean score of 2.55 and a standard deviation of 0.94. A skewness
of -1.41 and kurtosis of 4.92 was recorded for number of internal audit committee. Also, a
mean of 17.03 was recorded for number of internal audit meeting. A standard deviation of
17.93, skewness of 2.85 and kurtosis of 15.80 were also recorded under internal audit
meeting. Finally return on asset recorded a mean score of 488, standard deviation of 710,
skewness and kurtosis of 2.08 and 7.36 respectively.
4.2 Test of Normality, Heteroscedasticity and Multicollinearity
Under this section the study had covered Test of Normality, Heteroscedasticity and
Multicollinearity.
4.2.1 Test for Multicollinearity
Breusch-Godfrey Serial Correlation LM Test was adopted in this study to test for presence of
Serial Correlations on the study. The results of the Breusch-Godfrey Serial Correlation LM
Test as showed in the Table 4.2 indicated that multicollinearity was not a problem in the
models and therefore the data was fit for regression analyses.
Table 4.2: Breusch-Godfrey Serial Correlation LM Test:
Model 1
F-statistic 25.61536 Prob. F(2, 143) 0.3453
Obs*R-squared 40.09185 Prob. Chi-Square(2) 0.4561
Model 2

36
4.2.2 Test for Heteroscedasticity
Breusch-Pagan-Godfrey Heteroscedasticity LM Test was adopted in this study to test for
presence of Heteroscedasticity on the study. The results of the Breusch-Pagan-Godfrey
Heteroscedasticity LM Test as showed in the Table 4.3 indicated that Heteroscedasticity was
not a problem in the models and therefore the data was fit for regression analyses.
Table 4.3: Breusch-Pagan-Godfrey Heteroscedasticity LM Test
Model 1
Scaled explained SS 101.6937 Prob. Chi-Square(6) 0.4510
Model 2
Scaled explained SS 173.5358 Prob. Chi-Square(6) 0.5450
4.2.3 Test of Normality Return on Asset
Diagnostics analyses have been performed by assessing the presences of normality,
Heteroscedascity and multicollinearity Breusch-Godfrey Serial Correlation LM Test was
adopted in this study to test for presence of Serial Correlations on the study. Breusch-Pagan-
Godfrey Heteroscedasticity LM Test was adopted in this study to test for presence of
Heteroscedasticity on the study. Normality of the model was assessed using Jacque Bera test.
According to Jacque Bera test assumption for a distribution to the normal the Jacque Bera
plotting must be belly shaped. And secondly the probability of the Jacque Bera test statistics
must be greater than 0.05. Inferring Figure 4.1 and Figure 4.2 from these assumptions. The
study concludes that the distribution of the model is fairly normal distributed.

37
Figure 4.1 Test of Normality Return on Asset
Figure 4.2 Test of Normality Return on Equity
4.3 Correlation Matrix
Table 4.4: Inter-Constructs Correlation
BS BC NIAM DR NBM ROA ROE
Board Size 1
Board Composition .197*
(0.015)
1
Number of Internal Audit
Meeting
.303**
(0.000)
.315**
(0.000)
1
Director Remuneration/Fee .320**
(0.000)
.351**
(0.000)
.352**
(0.000)
1
Number of Board Meetings .307**
(0.000)
.176*
(0.030)
.281**
(0.000)
-.008
(0.919)
1
Return on Asset .513**
(0.000)
.268**
(0.001)
.381**
(0.000)
.708**
(0.000)
.080
(0.325)
1
Return of Equity .352**
(0.000)
.196*
(0.015)
.361**
(0.000)
.597**
(0.000)
.082
(0.313)
.916**
(0.000)
1
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).
0
5
10
15
20
25
30
-1.0e+07 -5000000 0.10000 5000000 1.0e+07 1.5e+07 2.0e+07
Series: Residuals
Sample 2011 2162
Observations 152
Mean 3.12e-10
Median -303448.6
Maximum 20571626
Minimum -9552119.
Std. Dev. 4416998.
Skewness 1.514000
Kurtosis 7.299584
Jarque-Bera 175.1496
Probability 0.000000
0
4
8
12
16
20
24
28
32
36
-2000000 0.05000 2000000 4000000 6000000 8000000 1.0e+07
Series: Residuals
Sample 2011 2162
Observations 152
Mean -4.30e-10
Median -184980.1
Maximum 9548982.
Minimum -2737786.
Std. Dev. 1634770.
Skewness 2.871725
Kurtosis 15.08353
Jarque-Bera 1133.660
Probability 0.000000

38
BS=Board Size; BC=Board Composition; NIAM=Number of Internal Audit Meeting; DR=Director
Remuneration/Fee; NBM=Number of Board Meetings; ROA=Return on Asset; ROE=Return on Equity
As illustrated in the inter-constructs correlations in the Table 4.4 he study found a significant
correlation between board size (r=0.513, p < 0.05) and return on asset. Moreover, the study
found a significant correlation between board composition (r=0.268, p < 0.05) and return on
asset. Also, the study found a significant correlation between number of internal audit
meeting (r=0.361, p < 0.05) and return on asset. More so, a significant correlation exist
between director remuneration/fee (r=0.708, p < 0.05) and return on asset. However the study
found insignificant (r=0.080, p > 0.05) correlation between number of board meetings and
return on asset.
Again, the study found a significant correlation between board size (r=0.352, p < 0.05).
Furtherance, the study found a significant correlation between board composition (r=0.196, p
< 0.05) and return on equity. Also, the study found a significant correlation between number
of internal audit meeting (r=0.361, p < 0.05) and return on equity. A significant correlation
exist between director remuneration/fee (r=0.597, p < 0.05) and return on equity. Finally, the
study found an insignificant (0.082, p > 0.05) correlation between number of board meetings
and return on equity. This implies that when it comes to measuring performance using return
on asset and return on equity number of board meetings have no correlation between the
constructs.
4.4 Impact of Corporate Governance on the ROA
Table 4.5: Model 1 Return on Asset
Variable Coefficient Std.
Error
T-
statistic
P-value
Board size 147 320 4.59 0.000
Board composition -237 399 -0.59 0.553
Number of board meetings -464 934 -0.49 0.620

39
Directors remuneration/fee 243 25.91 9.41 0.000
Number of internal audit committee 546 456 1.19 0.233
Number of internal audit meeting 502 231 2.17 0.031
Constant -909 203 -4.47 0.000
R-squared 0.61
Adjusted R-squared 0.59
S.E. of regression 450
Sum squared resid 2.95
Log likelihood -254
F-statistic 38.30
Prob(F-statistic) 0.000
As showed in the Table 4.5 the study found that 61% variability in Co-operative Credit
Unions financial performance are explained by corporate governance practices of the Co-
operative Credit Unions when using ROA as proxy for financial performance. The study
revealed that, board size (β = 147, T-value = 4.59, p-value < 0.05) was a significant
determinant of return on asset and board composition as an insignificant negative determinant
of return on asset (β = -237, T-value = -0.59, p-value > 0.05). Number of board meetings was
an insignificant negative determinant of return on asset (β = -464, T-value = -0.49, p > 0.05)
while directors remuneration/fee was a significant determinant of return on asset (β = 243, T-
value = 9.41, p-value < 0.05). Also, the study revealed that number of internal audit
committee was an insignificant determinant of return on asset (β = 546, T-value = 1.19, p-
value > 0.05) and number of internal audit meeting a significant determinant of return on
asset (β = 502, T-value = 2.17, p-value < 0.05). These results are in agreement with previous
reports. Owusu (2012) also discovered that the audit boards of the Ghanaian registered
companies were statistically small but linked to ROA. They found that by performing
particular tasks, the presence of executive members could enhance financial accounts,
legitimacy and credibility. In this regard, the tasks of these executive committees may
minimize issues for the organization with the eventual enhancement in company results
considering the concentration of this thesis on inspection, danger, remuneration and
appointment boards.

40
On the other hand, Puni (2015) discovered that a corporate finance review committee does
not have an important effect. He asserted that additional costs were attributable to the
establishment of executive committees, due to time management, transport costs and the
additional charges charged to committee representatives. He found that these committee
decisions can have an adverse impact on corporate results and found that the implementation
of the remuneration scheme can raise agency costs by Kyereboa-Coleman and Amidu (2008).
Given that the draft Corporate Regulations of the SEC (2003; 2010) and the Bank of Ghana
(2013) suggested that the surveillance of the management boards should have a beneficial
impact or influence on the performance of the company or firm as considered. This thesis
therefore argues that the presence and existence in the global funds of Ghanaian executive
members may assist or aid to decrease agency costs and expect to have a beneficial effect on
the performance of banking firms. In this section, it was found that empirical literacy’s on
board-to-business relations are blended (Lam & Lee, 2012; Klein, 1998; Kajola, 2008). A
favorable connection between panel members and economic results is suggested by the first
empirical plotting (Puni, 2015; Yung & Bucholtz, 2010).
Wild (1994) examined the reactions on the market before and after the establishment of audit
committees, using a sample of 260 US firms listed between 1966 and 1980. After the
institution of audit boards it revealed that the attendance of audit committees can enhance
management accountability for shareholders by statistically significant improvements in
stock yields. Main and Johnson (1993) examined the position of salary boards in UK
boardrooms in a sample of 220 big, UK businesses mentioned and reported that the existence

41
of a higher-paying remuneration board positively impacts on shareholder value and corporate
efficiency.
The second strand of empirical research indicates a detrimental effect on strong economic
results from the attendance of the committee members (Main and Johnson 1993; Vafaes
1999; Bozec 2005; Lam and Lee, 2012). Vafaes (199b) in his study used the data extracted
from the listed 307 companies from the year 1990 to 1994 and showed that there is a negative
relation between the members of the committee of board such as audits, remuneration and
selection and also the performance of corporate finance.
These surveys showed that the committees can impinge upon and dilute the duties taking by
the executives or can pre-empt leadership accountability and sometimes the committees are
used for confirming leadership choices with a rubber stamp. These surveys revealed that
committees may interfere with and dilute Executive Authority duties (Rainsburys et al., 2008;
Barker 2002) and those committees are sometimes used as a rubber stamp in order to verify
leadership choices. They also have the capacity to pre-empt leadership accountability. Puni
(2015) discovered an adverse connection between appointment committee and corporate
financial results using a sampled information from 31 coded firms at the Ghana Stock
Exchange between 2006 and 2010. Initially, they argued that the formation of executive
committees imposes additional costs for the committee employees in terms of management
moment, transport and additional compensation (Vefeas, 1999).Second, the unnecessary
management monitoring that can lead to the panel members is detrimental to the executive
strategy and perspective (Goodstein et al. 1994, Vefeas 1998). This will imply extra expenses
for companies. Empirical findings between executive members and bank performances have
been combined with particular references to the banking industries. Most of the current bank

42
research indicates a considerably favorable connection between executive members and the
profitability of the companies.
In a study of roughly 300 openly traded U.S. companies, Cornett et al., (2010) examined the
relations between multiple commercial and bank efficiency processes in the 2007-2008
financial crisis. More external or autonomous managers were discovered to be favorably
linked to companies ' results during the 2007 recession. In the same way, Cho & Kim (2007)
showed that the attendance level from the outside managers was important, with positive
relation with ROA's corporate results, in samples of 347 registered companies from Korea
during 1999.
Gordini (2012), through their inputs, such as abilities, perceptions and their links to internal
assets, revealed a favorable connection between non-Executive Directors and corporate
efficiency. The more external committee members the higher the proportion will lead in
stronger business results and bring importance to the business. The results are compatible
with agency theory and resource dependence theory, which is that non-management
managers are efficient controls and a disciplinary tool for organizational conduct. Erkens et
al. (2012) after using the information extracted from over 296 large banking firms to conduct
the study, a positive relation was found between unauthorized directors and the level of
equity within the periods of 2004 to 2008. If non- management's presence on the committee
increases surveillance efficiency, the company's output should be enhanced. The board's
independence is increased by having a greater share of external managers.
4.5 Impact of Corporate Governance on ROE
Table 4.6: Model 2 Return on Equity
Variable Coefficient Std. Error T-statistic P-value

43
Board composition -132 148 -0.89 0.371
Board size 239 118 2.02 0.045
Directors remuneration/fee 66.49 9.59 6.93 0.000
Number of board meetings 459 345 0.13 0.899
Number of internal audit committee 342 169 2.02 0.044
Number of internal audit meeting -637 856 -0.07 0.940
Constant -195 752 -2.60 0.010
R-squared 0.40
Adjusted R-squared 0.38
S.E. of regression 166
Sum squared resid 4.04
Log likelihood -238
F-statistic 16.46
Prob(F-statistic) 0.000
Moreover, as indicated in the Table 4.5 the study found that 40% variability in Co-operative
Credit Unions financial performance are explained by corporate governance practices of the
Co-operative Credit Unions when using ROE as proxy for financial performance. The study
found that 40% variability in the study found that, board composition (β = -132, T-value = -
0.89, p-value > 0.05) was an insignificant negative determinant of return on equity and board
size (β = 239, T-value = 2.02, p < 0.05) as a significant determinant of return on equity.
Moreover, the study revealed that directors’ remuneration/fee (β = 66.49, T-value = 6.93, p-
value < 0.05) was a significant determinant of return on equity, however number of board
meetings (β = 459, T-value = 0.13, p > 0.05) was an insignificant determinant of return on
equity. Again, number of internal audit committee (β = 342, T-value = 2.02, p-value < 0.05)
was a significant determinant of return on equity. However, number of internal auditing
meeting was an insignificant negative determinant of return on equity. These results partially
relate to previous studies. Sanda et al. (2010) also discovered that the sample of 93 Nigerian
companies mentioned from 1996 to 1999 had a favorable relationship between board size and
strong profitability under the proxy of equity return (ROE). Adams and Mehran (2012) have
discovered that panel size has a strong connection with results based on a sample of
information from US bank owning firms over a span of 34 years as represented in Tobin's Q.

44
They claim that panel size rises are essential because of addition of the managers who also
have members of the subsidiary committee. Furthermore, Aebi et al. (2012) found that
committee volume is favorably linked to the efficiency indices of 372 American companies
assessed by purchasing and holding and ROE over 2007-2008.
Mangena and Tauringana (2008) recorded a favorable link between the magnitude of the
panel and their financial results in an area of serious political and economic confusion with a
sample of 72 companies mentioned in Zimbabwe from 2002 to 2004. In a sample of Nigeria's
23 businesses mentioned between 2000 and 2006 (Return on the Capital Worked), Kajola
(2008) has found beneficial relationships between committee volume and economic results. ).
Dalton and Dalton (2005); Klein (2002) took a view to promoting variety in big boards,
which provides the company a competitive edge in distinct areas of knowledge, experience,
competence, resource co-optation abilities, corporate-strategic development, creativity, and
wide-ranging service delivery. It was stated in other studies that bigger committees are
positive for greater financial efficiency (Pearce & Zahra, 1992), and that more extensive
committees may employ managers with appropriate and supplementary knowledge and
expertise, and thus derive their knowledge and abilities from a wider spectrum (Van de
Berghe & Levrau, 2004).
Furthermore, Jackling and Johl (2009) claim that a large board improves the value and
efficiency of policy choices, as it increases academic understanding. This provides empirical
support for Tornyeva and Wereko's (2012) past research in Ghana. They asserted that
reducing the volume of the board helps to avoid issues for the drivers or bad co-operation and
communication resulting from large panels. As the magnitude of the committee improves the
co-ordination problems, resulting in communication, the board's capacity to monitor

45
management decreases and thus the issue of agencies decreases. They also note the bulk of
the banking councils are dominated by families, control or principal shareholders that impairs
the method of autonomous judgment.
External committees dominated by executives or not corporate managers have a positive
effect on corporate results were found within the premier empirical literature (al-Sahafietal.,
2015; al-Hawary (2011); Yesser et al., (2011) Cho and Kim, 2007; Bino and Tomar, (2007).
Yasser et al. (2011) provided proof that corporate governance has a positive impact on
financial results of 792 Pakistani corporations mentioned in the Karashi Stock Exchange
during the era 2003-2008. Good corporate governance promotes efficiency in an organization
thus helps to enhance transparency and orderliness in operational activities. Also, board and
executives are able to focus on organizational goals and objectives to maximize effort in
achieving operational performance. The Organisation of Economic Co-operation and
Development indicated that, good corporate governance helps management to protect the
interest of shareholders and overall increase the financial capabilities of the firm (OECD,
2004). Claessens (2003) further showed that, effective management of an organization helps
the firm to attract financial resources which helps in lowering operational cost and achieving
financial growth

46
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.0 Introduction
This chapter presents the summary of findings, conclusions and recommendations in relation
to the study which is aimed to assess the impact of corporate governance on the financial
period of 2011-2018.
5.1 Summary of Findings
5.1.1 Impact of Corporate Governance on the Financial (ROA) Performance
using ROA as proxy for financial performance. The study revealed that, board size (β = 147,
T-value = 4.59, p-value < 0.05) was a significant determinant of return on asset and board
composition as an insignificant negative determinant of return on asset (β = -237, T-value = -
0.59, p-value > 0.05). Number of board meetings was an insignificant negative determinant
of return on asset (β = -464, T-value = -0.49, p > 0.05) while directors remuneration/fee was a
significant determinant of return on asset (β = 243, T-value = 9.41, p-value < 0.05). Also, the
study revealed that number of internal audit committee was an insignificant determinant of
return on asset (β = 546, T-value = 2.17, p-value > 0.05) and number of internal audit
meeting a significant determinant of return on asset (β = 502, T-value = 2.17, p-value < 0.05).
5.1.2 Impact of Corporate Governance on the Financial (ROE) Performance
Moreover, as indicated in the Table 4.5 the study found that 40% variability in Co-operative
Credit Unions financial performance are explained by corporate governance practices of the

47
Co-operative Credit Unions when using ROE as proxy for financial performance. The study
found that 40% variability in the study found that, board composition (β = -132, T-value = -
0.89, p-value > 0.05) was an insignificant negative determinant of return on equity and board
size (β = 239, T-value = 2.02, p < 0.05) as a significant determinant of return on equity.
Moreover, the study revealed that directors’ remuneration/fee (β = 66.49, T-value = 6.93, p-
value < 0.05) was a significant determinant of return on equity, however number of board
meetings (β = 459, T-value = 0.13, p > 0.05) was an insignificant determinant of return on
equity. Again, number of internal audit committee (β = 342, T-value = 2.02, p-value < 0.05)
was a significant determinant of return on equity. However, number of internal auditing
meeting was an insignificant negative determinant of return on equity.
5.2 Conclusions
This study was aimed to assess the impact of corporate governance on the financial
period of 2011-2018. The study revealed that 61% variability in Co-operative Credit Unions
financial performance are explained by corporate governance practices of the Co-operative
Credit Unions when using ROA as proxy for financial performance. Moreover, the study
found that 40% variability in Co-operative Credit Unions financial performance are explained
by corporate governance practices of the Co-operative Credit Unions when using ROE as
proxy for financial performance.
The study revealed that, board size was a significant determinant of return on asset and board
composition as an insignificant negative determinant of return on asset. Number of board
meetings was an insignificant negative determinant of return on asset while director’s
remuneration/fee was a significant determinant of return on asset. Also, the study revealed

48
that number of internal audit committee was an insignificant determinant of return on asset
and number of internal audit meeting a significant determinant of return on asset.
Moreover, study found that 40% variability in the study found that, board composition was an
insignificant negative determinant of return on equity and board size as a significant
determinant of return on equity. Moreover, the study revealed that directors’
remuneration/fee was a significant determinant of return on equity, however number of board
meetings was an insignificant determinant of return on equity. Again, number of internal
audit committee was a significant determinant of return on equity. However, number of
internal auditing meeting was an insignificant negative determinant of return on equity.
5.3 Recommendations
using ROA as proxy for financial performance. The study recommends that management of
credit unions must ensure their corporate governance structure is strong and active in order to
enhance return on asset.
Moreover, the study found that 40% variability in Co-operative Credit Unions financial
performance are explained by corporate governance practices of the Co-operative Credit
Unions when using ROE as proxy for financial performance. Again, the study recommends
that management of credit unions must ensure their corporate governance structure is strong
and active in order to enhance return on equity.

ASSESSING THE IMPACT OF CORPORATE GOVERNANCE ON THE FINANCIAL PERFORMANCEOFSELECTED CO-OPERATIVE CREDIT UNIONS (CCUs) IN ASHANTI REGION

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