Corporate governance, ownership structure and performance of SMEs in Ghana: implications for financing opportunities

Abstract

Purpose: This study seeks to assess how the adoption of corporate governance structures affects the performance of SMEs (small to medium‐sized enterprises) in Ghana.Design/methodology/approach: Regression analysis is used to estimate the relationship between corporate governance and ownership structure and performance.Findings: The results show that board size, board composition, management skill level, CEO duality, inside ownership, family business, and foreign ownership have significantly positive impacts on profitability. Corporate governance can greatly assist the SME sector by infusing better management practices, stronger internal auditing, greater opportunities for growth and new strategic outlook through non‐executive directors. It is clear that corporate governance structures influence performance of SMEs in Ghana.Originality/value: This paper provides insights on the effects of corporate governance and ownership structure on the performance of Ghanaian SMEs. The paper also shows the implications of SMEs gaining access to finance as a result of adopting a good governance system.