Institutional Investors, Corporate Governance and Firm Performance : Evidence from Emerging Economy

The role of institutional investors in shaping corporate governance among banks attracted attention following the collapse of seven banks in Ghana. The study thus investigates the impact of institutional investors on corporate governance practice and performance of commercial banks in Ghana. Both corporate reporting and audit qualities are used as measures of corporate governance whilst Return on Assets (ROA) is used as a measure of performance. Thirty-two commercial banks in Ghana are used for the study. The annual reports of the banks from 2012 to 2016 provided the data for the study. System GMM is employed to estimate the impact of institutional investors on corporate governance practice of the banks. The research evidence shows that institutional investors influence the quality of corporate reporting and auditing of the banks in Ghana. The results further suggest that institutional investors impacts on the ROA of the banks.