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

Abstract

Purpose

This paper aims to examine the impact of diversity of board members’ educational qualifications on the financial performance of banks in Ghana.

Design/methodology/approach

The 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.

Findings

The 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/implications

Unobservable 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/value

The 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.

Citation

Boadi, I. and Osarfo, D. (2019), "Diversity and return: the impact of diversity of board members’ education on performance", Corporate Governance, Vol. 19 No. 4, pp. 824-842. https://doi.org/10.1108/CG-01-2019-0017