Effect of Corporate Governance on the Financial Performance of Public Limited Companies in Cameroon

Abstract

This study investigates the impact of corporate governance on the financial performance of Public Limited Companies (PLCs) in Cameroon. Utilizing data from annual reports and a survey, the research integrates both primary and secondary data sources. A sample of 67 PLCs in Cameroon was analyzed using the Ordinary Least Squares (OLS) regression method. The findings reveal that board size, CEO duality, and gender diversity have significant positive effects on financial performance, measured by Return on Assets (ROA). However, while board composition exhibited a positive relationship, it was not statistically significant at the 5% level. These insights suggest that increasing board size and enhancing gender diversity can contribute to improved financial outcomes. The study recommends strengthening the strategic capabilities of CEOs and board chairmen, whether roles are combined or distinct, and endorses the inclusion of non-executive directors with specialized expertise. Additionally, developing tailored training programs for managers and board members and aligning corporate governance practices with international standards adapted to local contexts are advised. The research concludes that the weak corporate governance structures in Cameroon have contributed to business challenges, emphasizing the critical role of effective governance practices in enhancing financial performance.