Department of Finance, University of Ghana Business School, P.O. Box LG 78, Legon, Accra, Ghana
Kyereboah-Coleman, A., Department of Finance, University of Ghana Business School, P.O. Box LG 78, Legon, Accra, Ghana; Amidu, M., Department of Finance, University of Ghana Business School, P.O. Box LG 78, Legon, Accra, Ghana
The present study set out to examine corporate governance practices of SMEs in Ghana and whether there is any linkage between these governance practices and financial performance. We employed two levels of interaction to achieve our objectives: The first is an interview for a general understanding of governance issues in the SME sector and the subsequent design of a questionnaire for an exploration of the linkages between governance issues and firm financial performance by employing a linear model. The study reveals that governance structures in SMEs are jointly influenced by credit providers and business ethical considerations. The regression results show that board size, size of audit committees, corporate ethics and the proportion of outsiders on the audit committees have negative impact on financial performance while independence of the board and the presence of audit committees enhance firms' financial performance. The findings have some policy implications in that it shows that exporting SMEs are relatively profitable. It is recommended that in an attempt to promote exports, the legal and regulatory environment should be conducive for these firms. © 2008 by The Haworth Press. All rights reserved.