Does Corporate Governance Improve Financial Performance? Empirical Evidence from Africa Listed Consumer Retailing Companies

Abstract

The role of corporate governance (CEO duality, high concentration of ownership, diverse board membership, a sizable board, an independent audit committee, and regular board meetings) in boosting financial performance at firms is investigated. Over a period of 10 years, 49 consumer retailing companies listed on the West, East, and Southern African Stock Exchanges were subjected to a fixed effect model following a Hausman Specification Test for 2012-2021. There were four proxies for financial performance: two accounting metrics (Return on Assets and Return on Equity) and two market metrics (Tobin's Q and Market Capitalization). The findings show that having a larger board and a CEO duality is positively correlated with financial results. However, the results did not show any correlation between the frequency of audit committee meetings and improved financial results. Greater board and audit committee independence may be reevaluated for relevance to firm financial performance by regulators and policymakers.