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Diversity and return: the impact of diversity of board members’ education on performance

Diversity and return: the impact of diversity of board members’ education on performance This paper aims to examine the impact of diversity of board members’ educational qualifications on the financial performance of banks in Ghana.Design/methodology/approachThe present study applies system generalized methods of moments as an econometric model in carrying out the analysis. The study yielded a usable sample of 28 banks spanning from 2001 to 2016.FindingsThe paper concludes that the Ghanaian banking sector profit diverges and invalidates the convergence theory or “catch-up effect”. Specifically, educational qualifications of board members are relevant to banks’ financial performance. Across all the models used, board members with a first degree have a significant positive impact on performance. The opposite is the case for board members with Doctor of Philosophy (PhD).Research limitations/implicationsUnobservable characteristics such as entrepreneurial skills and intellectual competence experiences are excluded from the study because of the difficulties in measuring these variables. Notwithstanding, the exclusion of these characteristics does not invalidate the general outcome of the study.Originality/valueThe present study examines the impact of diversity of board members’ educational qualification on financial performance in the context of Sub-Saharan Africa, particularly Ghana. It also extends the existing literature by decomposing the banking sector into listed, non-listed, foreign and domestic banks. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Corporate Governance Emerald Publishing

Diversity and return: the impact of diversity of board members’ education on performance

Boadi, Isaac; Osarfo, Daniel
Corporate Governance , Volume 19 (4): 19 – Aug 13, 2019
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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1472-0701
DOI
10.1108/cg-01-2019-0017
Publisher site
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Abstract

This paper aims to examine the impact of diversity of board members’ educational qualifications on the financial performance of banks in Ghana.Design/methodology/approachThe present study applies system generalized methods of moments as an econometric model in carrying out the analysis. The study yielded a usable sample of 28 banks spanning from 2001 to 2016.FindingsThe paper concludes that the Ghanaian banking sector profit diverges and invalidates the convergence theory or “catch-up effect”. Specifically, educational qualifications of board members are relevant to banks’ financial performance. Across all the models used, board members with a first degree have a significant positive impact on performance. The opposite is the case for board members with Doctor of Philosophy (PhD).Research limitations/implicationsUnobservable characteristics such as entrepreneurial skills and intellectual competence experiences are excluded from the study because of the difficulties in measuring these variables. Notwithstanding, the exclusion of these characteristics does not invalidate the general outcome of the study.Originality/valueThe present study examines the impact of diversity of board members’ educational qualification on financial performance in the context of Sub-Saharan Africa, particularly Ghana. It also extends the existing literature by decomposing the banking sector into listed, non-listed, foreign and domestic banks.

Journal

Corporate Governance – Emerald Publishing

Published: Aug 13, 2019

Keywords: Profitability; Ghana; Diversity; Board member; System generalized methods of moments

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