Financial performance of hospitals: A critical obligation of corporate governance dimensions

Stephen Owusu Afriyie · Yusheng Kong · Peter Yao Lartey · Kaodui Li · Isaac Asare Bediako · Wenhao Wu +1 more

14 citations0/0 files storedThe International Journal of Health Planning and Management

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Corporate Finance and Governance Health Services Management and Policy Corporate Governance and Financial Management

Abstract

BACKGROUND: This paper aims to investigate the effects of corporate governance mechanisms on the financial performance of hospitals. The statement, "good corporate governance" has been incorporated in the health care sector over the last decade, as an element to improve financial performance. METHODS: The researchers relied on both primary and secondary data in the study. For the primary data, the authors used structured and nonstructured questionnaires to obtain data from 125 hospitals. The secondary data used emanated from board meetings, financial statements and relevant reports of the selected hospitals from 2010 to 2017. However, the data was then sorted out to get the required information on Chief Executive Officer (CEO) presence, board relationship, governance dynamics, gender diversity and financial performance. RESULTS: On the basis of empirical evidence provided in this study, the results show that the Independent Directors (INDPDR) variable has a positive effect on Return on Assets and Net Profit Margin and also a high statistically significant value of 0.000 for both performance measures. This is an indication that the variable, INDPDR, is highly capable of improving hospital financial performance. From our studies, Board Size and CEO Duality exhibited a negative relationship with the financial performance measures. CONCLUSIONS: Every hospital needs money to maintain a standard health facility and to sustain in operation. However, the inclusion of board of directors improves hospital financial management and enhances performance. Corporate governance mechanisms influence the behavior of health systems in ways that are associated with financial performance.

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2015Does the presence of independent and female directors impact firm performance? A multi-country study of board diversity 2004Corporate Governance and Accountability 2012Corporate Governance: Principles, Policies, and Practices 2014Agency Theory and Bounded Self-Interest 1997Corporate Governance: Its scope, concerns and theories 2012Board characteristics and the financial performance of Nigerian quoted firms 2016Board diversity and CSR reporting: an Australian study 2015Does Gender Matter? Female Representation on Corporate Boards and Firm Financial Performance - A Meta-Analysis

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