Corporate governance compliance and stock market performance of listed firms in Ghana, the role of sustainability disclosure

Abstract

There have been several studies that have explored the linkage between corporate governance practices and stock market performance, most of which have reported inconclusive and conflicting result. This could be attributable to the fact that, the mediating role of certain variables that plays significant role in such relationship are usually ignored. On this basis, the current study examines the mediums through which corporate governance compliance translate into stock market performance. In this direction, the current study aimed at examining the linkage between corporate governance compliance and stock market performance through a sustainability reporting. A sample of 14 listed firm were selected and data on study variables were collected from annual reports and stand-alone sustainability reports over a six-year period from 2017 to 2022. The data was analysed using structural equation modelling. It was observed that, firms in the extractive industry maintained high level of Sustainability disclosure as compare to those manufacturing firms. Also, increase corporate governance compliance directly influence their stock market performance which is a confirmation of signalling theory. Again, sustainability disclosure was found to partially mediate the relationship between corporate governance compliance and stock market performance. The study therefore recommends that the activities on sustainability should be clearly integrated as part of the firm’s corporate and business level strategies. The study again recommends that, firms should consciously adopt a proper strategy to comply with corporate governance rules as this have direct influence on stock market performance.