Impact of corporate board size and board independence on stock returns volatility in Ghana

This paper investigates the role of corporate board size and board independence on the volatility of stock returns of Ghanaian-listed firms. A sample of 22 listed firms on the Ghana Stock Exchange was used, between 2011 and 2019. The study adopted the panel-corrected standard error (PCSE) regression technique supported by Driscoll-Kraay and robust ordinary least square (OLS) approaches as robustness measures. It was found that corporate board size of listed firms must be sizeable enough to reduce the volatility of stock returns. More specifically, the findings demonstrate that firms with large corporate board sizes are associated with lower stock returns volatility in support of the agency theory. Moreover, board independence indicates a positive and significant relationship with stock return volatility in support of the risk-seeking hypothesis. This implies that increasing the number of outside board executives on corporate boards is not enough to reduce stock return volatility perhaps due to a high level of information asymmetry between outside board members and insiders. Similarly, large firms are more volatile in terms of stock returns than smaller firms. Thus, this study recommends stricter enforcement of monitoring and disclosure of relevant market information on listed firms as well as strengthening the capacity of independent board executives via appropriate training.