This study sought to establish the effect of board characteristics on banks’ Financial Distress (FD). The study was specifically set out to achieve three (3) specific objectives, namely (1) to predict the financial distress of banks using the revised Altman’s z-score and Springate model, (2) to establish board characteristics of …
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This study sought to establish the effect of board characteristics on banks’ Financial Distress (FD). The study was specifically set out to achieve three (3) specific objectives, namely (1) to predict the financial distress of banks using the revised Altman’s z-score and Springate model, (2) to establish board characteristics of banks in Ghana, and (3) the predict the effect of board characteristics on banks’ financial distress. The study was strictly a quantitative study covering 17 listed and non-listed banks. The study spans from 2011 – 2022. First, the study established that Altman’s z-score predicted the financial distress status of banks in Ghana with 100% accuracy. On the other hand, Springate's model inaccurately predicted all seventeen (17) banks as financially distressed. Second, the Board of Directors of banks in Ghana is highly dominated by Non-Executive Directors (independent directors) and female representation on bank boards in relation to size, CEO, and chairperson is relatively low. The average board size and board meetings of banks in Ghana are 9 and 7 respectively. Female CEO and total assets were identified as having a significant positive effect on banks’ financial distress. The study, therefore, concludes that the revised Altman’s z-score has the predictive ability to detect financial distress status among banks in Ghana. Also, female CEO can positively improve the financial distress status of banks in Ghana. It is recommended that banks in Ghana should increase female representation on their board and also give the opportunity to serve as CEO and chairperson on their board.
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