Governance structures, cash holdings and firm value on the Ghana Stock Exchange

2018 ◽  
Vol 18 (4) ◽  
pp. 671-685 ◽  
Author(s):  
Disraeli Asante-Darko ◽  
Bright Adu Bonsu ◽  
Samuel Famiyeh ◽  
Amoako Kwarteng ◽  
Yayra Goka
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Boards Of Directors ◽  
Stock Exchange ◽  
Cash Holdings ◽  
Debt Financing ◽  
Content Type ◽  
Governance Practices ◽  
Ghana Stock Exchange ◽  
The Relationship

Purpose There is an existing relationship among shareholders, boards of directors and management of companies. Corporate governance practices of companies are expected to ensure that this relationship maximises the wealth of shareholders. Differences exist among corporate governance of companies listed on the Ghana Stock Exchange. Companies, for purposes of liquidity, hold cash, but cash holdings also add to the cost of financing, according to working capital theories. The study, thus, sought to examine the relationship between corporate governance practices, ownership structure, cash holdings and firm value. Design/methodology/approach The study deployed the seemingly unrelated regression to reduce the problem of multicollinearity resulting from the strong relationship between cash reserves and some control variables. Findings The study found no significant relationship between board size and firm value. Similar findings were also made on the relationship between proportion of non-executive directors on the board and firm value. However, firms audited by the big four audit firms are valued higher by the capital market. Cash holdings of firms negatively affect performance, and this is statistically significant. A positive relationship arises between a firm’s cash holdings and its value as a result of debt financing, even though this is not significant. Originality/value The study is the first of its kind that deploys Tobin’s Q as a measure of firms’ value to reflect investors’ valuation of firms in Ghana. The study is also the first of its kind to test the interactive effect of debt financing and cash holdings on firm value in Ghana.

Corporate governance in Ghana

2019 ◽  
Vol 27 (2) ◽  
pp. 126-140 ◽  
Author(s):  
Larry Amartei Amartey ◽  
Mei Yu ◽  
Osita Chukwu-lobelu
Keyword(s):  
Corporate Governance ◽  
Boards Of Directors ◽  
Stock Exchange ◽  
Audit Committees ◽  
Annual Reports ◽  
Content Type ◽  
External Auditors ◽  
Governance Systems ◽  
Code Of Corporate Governance ◽  
Ghana Stock Exchange

Purpose This study aims to examine the mechanisms that were being used to enhance board accountability of Ghanaian listed banks, and how board accountability can be improved. Design/methodology/approach The 2011 and 2016 annual reports of listed banks on the Ghana Stock Exchange were examined, and a survey questionnaire was sent to board members of nine banks. Findings The results show that the directors of Ghanaian listed banks prioritise a shareholder approach to accountability, with a shift towards stakeholders. Audit committees, external audits and internal audits were the main mechanisms used by these banks to enhance board accountability. Some of these mechanisms were not used effectively by a number of these banks. Practical implications Board accountability can be improved by appointing very competent people to the board, the national adoption of a mandatory code of corporate governance, regular rotation of external auditors and requiring non-executive directors to stand for re-election more frequently. Our research identifies weaknesses of accountability mechanisms and offers timely recommendations for banks and regulators to build stronger corporate governance systems. Originality/value This study obtained valuable opinions of the boards of directors, provides insights on boards of Ghanaian listed banks and contributes to the literature of corporate governance and accountability in Africa.

scholarly journals Corporate governance and conglomerate diversification strategy – evidence from Vietnam

2018 ◽  
Vol 13 (6) ◽  
pp. 1578-1596 ◽  
Author(s):  
Thi Xuan Trang Nguyen
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Board Composition ◽  
Governance Mechanisms ◽  
Content Type ◽  
Unrelated Diversification ◽  
Corporate Governance Mechanisms ◽  
Control Devices ◽  
Interest Alignment ◽  
The Relationship

Purpose The purpose of this paper is to examine the impact of internal corporate governance mechanisms, including interest alignment and control devices, on the unrelated diversification level in Vietnam. Additionally, the moderation of free cash flow (FCF) on these relationships is also tested. Design/methodology/approach The study is based on a balanced panel data set of 70 listed companies in both stock markets, Ho Chi Minh Stock Exchange and Hanoi Stock Exchange, in Vietnam for the years 2007–2014, which gives 560 observations in total. Findings The results show that if executive ownership for CEOs is increased, then the extent of diversification is likely to be reduced. However, the link between unrelated diversification level and executive stock option, another interest alignment device, cannot be confirmed. Among three control devices (level of blockholder ownership, board composition and separation of CEO and chairman positions), the study finds a positive connection between diversification and blockholder ownership, and statistically insignificant relations between the conglomerate diversification level and board composition, or CEO duality. Additionally, this study discovers a negative link between diversification and state ownership, although there is no evidence to support the change to the effect of each internal corporate governance mechanism on the diversification level of a firm between high and low FCF. Practical implications The research can be a useful reference not only for investors and managers but also for policy makers in Vietnam. This study explores the relationship among corporate governance, diversification and firm value in Vietnam, where the topics related to effectiveness of corporate governance mechanisms to public companies has been increasingly attractive to researchers since the default of Vietnam Shipbuilding Industry Group (Vinashin) happened in 2010 and the Circular No. 121/2012/TT-BTC on 26 July 2012 of the Vietnamese Ministry of Finance was issued with regulations on corporate governance applicable to listed firms in this country. Originality/value This research, first, enriches current literature on the relationship between corporate governance and firm diversification. It can be considered as a contribution to the related topic with an example of Vietnam, a developing country in Asia. Second, the research continues to prove non-unification in results showing the relationship between corporate governance and conglomerate diversification among different nations. Third, it provides a potential input for future research works on the moderation of FCF to the effects of corporate governance on diversification.

Relationship between corporate governance and audit switching: Iranian evidence

2017 ◽  
Vol 59 (5) ◽  
pp. 673-686
Author(s):  
Mahdi Salehi ◽  
Ali Asgar Alinya
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Stock Exchange ◽  
Listed Companies ◽  
Panel Analysis ◽  
Cross Sectional ◽  
Content Type ◽  
Effective Factors ◽  
Dependent Variables ◽  
The Relationship

Purpose This paper aims to investigate the relationship between corporate governance and auditors switching of listed companies on the Tehran Stock Exchange. Design/methodology/approach To achieve the objectives of this study, 12 hypotheses developed which and tests the relationship between corporate governance and selecting and switching auditors in Iran during 2008-20014 by selecting 116 listed companies on the Tehran Stock Exchange. To test the hypotheses, the cross-sectional time-series nature of research variables data, panel analysis is used. Also, to investigate the relationship between independent and dependent variables in each year, the logistic regression is used. Findings The results of the study indicate that there is a weak relationship between corporate governance auditors switching. Therefore, it could be concluded that there are some other effective factors on which selecting and switching auditors in studied companies are more dependent. Originality/value The current study is almost the first study which has been conducted in Iran, so the results of the study may be beneficial to the Iranian conditions as well as other developing countries.

scholarly journals The Relationship Between Corporate Governance Practices and Financial Performance: Evidence from Amman Stock Exchange

2021 ◽  
pp. 63-87
Author(s):  
Hussein Ahmad Bataineh ◽  
Sulaiman Salim Al Harthy ◽  
Raqiya Ali Al Balushi
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Stock Exchange ◽  
Predictor Variable ◽  
P Value ◽  
Amman Stock Exchange ◽  
Governance Practices ◽  
Unit Increase ◽  
Beta Coefficient ◽  
The Relationship

The objective of the study was to establish the relationship between corporate governance Index and financial performance and evidence from Amman stock exchange. To achieve this objective, this study applied descriptive research structure. In this case, the research focused on the 181 firms listed at the Amman Stock Exchange (Appendix I). The statistical techniques that was applied to analyze collected data included descriptive statistics. The information analyzed revealed that the model summary indicated that the R² to be 0.243. This meant that 24.3% of the variation in performance (ROA) was due to the predictor variable captured in the study. This also implied that 75.7% of the variation in ROA was attributed to the measurements of error and other factors that could have had an effect on the ROA but were not captured in the study. The estimated model showed that ROA when other factors are held constant was 1.610. The outcomes also revealed that governance score had a beta coefficient of 0.573 indicating that for every unit increase in governance score on the ROA went up by 0.573. This relationship is significance since P-value of 0.025<0.05. Therefore, the model qualified as a good predictor. Keywords: Corporate Governance, Financial Performance, Amman stock Exchange.

scholarly journals Manajemen Modal Kerja Dan Dampaknya Terhadap Nilai Perusahaan Dengan Corporate Governance Sebagai Variabel Pemoderasi

2014 ◽  
Vol 6 (1) ◽  
pp. 68
Author(s):  
Adrianus Dhimas Setyanto ◽  
Ika Permatasari
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Stock Exchange ◽  
Capital Management ◽  
Working Capital ◽  
Corporate Values ◽  
Working Capital Management ◽  
Enterprise Value ◽  
Cash Conversion Cycle ◽  
The Relationship

AbstractThis study aims to determine the effect of working capital management on firm value. Corporate governance is used as a moderating variable in this study to explore the role of corporate governance in the relationship between working capital management with corporate values. Program participants of Corporate Governance Perception Index (CGPI) are used as a sample during the period from 2003 to 2011 and listed on the Indonesian Stock Exchange (IDX). We were using simple linear regression and the testing of moderating effects were calculated by Moderated Regression Analysis (MRA). The results showed that the working capital management has an influence on the value of the firm. However, corporate governance variables failed to moderate the relationship between working capital management and enterprise value. It shows that companies and investors in the market still lack concern for the program response and Corporate Governance Perception Index (CGPI) as an assessment of the application of the principles of corporate governance that has been done by the company .Keywords: Working Capital Management, Cash Conversion Cycle, Corporate Governance, Firm Values

Corporate governance, globalization and firm performance in emerging economies

2018 ◽  
Vol 67 (8) ◽  
pp. 1310-1333 ◽  
Author(s):  
Neha Saini ◽  
Monica Singhania
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Panel Data ◽  
Foreign Capital ◽  
Good Governance ◽  
Foreign Ownership ◽  
Foreign Firms ◽  
Content Type ◽  
Governance Practices ◽  
The Relationship

PurposeThe purpose of this paper is to examine relationship between corporate governance (CG) and firm performance for a set of 255 foreign-funded firms in the form of foreign direct investment (FDI) and private equity (PE). The authors employ a wide range of CG measures including board size, meetings, board gender and foreign ownership which are used as the proxy of globalisation and control variables like firm age, leverage, firm size and capital expenditure to arrive at a conclusion.Design/methodology/approachPanel data set of 255 (187 companies funded by foreign capital in the form of FDI, and 68 companies having foreign capital in the form PE) companies listed on Bombay Stock Exchange, for the period of eight years (2008–2015) are analysed by using static (fixed and random effects) and dynamic (generalised method of moments (GMM)) panel data specifications to examine the relationship among CG, globalisation and firm performance.FindingsThe empirical results of static model indicate the relationship between CG and performance of foreign firms, which are not very strong in India. This is due to the fact that most of the firms are not following the guidelines and regulations strictly in the initial period of sample years. Diversity in board is found as an important variable in accessing firm performance. And the authors also found that foreign firms are very particular about the implementation of CG norms. The results of GMM model highlight the interaction term of foreign ownership with governance indicators. CG is having a positive and significant impact over performance, inferring that higher foreign ownership (in the form of FDI and PE) in firm leading to positive effect on profitability.Practical implicationsThe investor’s preference of financing a unit is guided by the performance of a firm. Investors are more inclined towards high-performing firms, and hence higher profitability leads to higher inflow of capital. The result indicates that higher accounting and market performance may be achieved by good governance practices, in turn, leading to reduced agency costs. Countries with high governance scores attract more of foreign capital. Similar to the best governed countries, the companies having good governance practices attract more foreign inflows in the form of capital.Originality/valueWhile previous literature considered a single measurement framework in the form of a CG index, the authors tried to incorporate a range of CG indicators to study the effect of globalisation and CG on firm performance. The authors segregated foreign-owned funds into two parts, especially FDI and PE. This paper examined heterogeneity in the form of FDI-funded and PE-funded firms, as no prior literature is available which has evaluated different sets of foreign funds simultaneously on CG.

scholarly journals The relationship between intellectual capital information and firms’ market value: a study from an emerging economy

2019 ◽  
Vol 24 (1) ◽  
pp. 39-51
Author(s):  
A.A. Ousama ◽  
Mashael Thaar Al-Mutairi ◽  
A.H. Fatima
Keyword(s):  
Intellectual Capital ◽  
Firm Value ◽  
Stock Exchange ◽  
Market Value ◽  
Total Sample ◽  
Emerging Economy ◽  
Annual Reports ◽  
Content Type ◽  
Knowledge Based Economy ◽  
The Relationship

Purpose The purpose of this paper is to investigate the relationship between the intellectual capital (IC) information reported in the annual reports and market value of the companies listed on the Qatar Stock Exchange. Design/methodology/approach The study is based on a panel data collected from the annual reports and Bloomberg database for six years, specifically the periods 2010-2012 and 2016-2018. The total sample consists of 252 observations. The theoretical framework was developed in reference to the resource-based theory. The regression model is based on Ohlson’s model, which has been modified by including IC information. Findings The study found that there is a significant relationship between IC information and firm market value. This finding indicates that companies report their IC to help the stakeholders (e.g. shareholders, investors) to understand the real value of the company (which includes IC values). Practical implications The shift to a knowledge-based economy (KBE) has made knowledge a driver for economic growth, and it has become more important than capital, land and labour. This shift makes IC and resources vital for companies to create wealth, value and gain competitive advantage. The State of Qatar plans to transform its economy to a KBE in its “Qatar Vision 2030”. The findings of the study show that the companies have started to depend more on IC to contribute to transforming Qatar’s economy to a KBE. Originality/value This study could be considered a pioneer study to examine the association of IC disclosure and firm value in Qatar. Furthermore, prior literature has mixed findings, which justifies further investigation of IC’s effect on market value, particularly in the emerging economy of Qatar.

scholarly journals Exploring Linkages Between Corporate Governance and Business Performance: Does Good Corporate Governance Lead to Enhanced Business Value?

2020 ◽  
Vol 27 (1) ◽  
pp. 37-61
Author(s):  
Tirthankar Nag ◽  
Chanchal Chatterjee
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Business Performance ◽  
Stock Exchange ◽  
Random Effect ◽  
Corporate Boards ◽  
Market Returns ◽  
Good Corporate Governance ◽  
Governance Practices ◽  
The Relationship

This study explores the influence of corporate governance practices in corporate boards on firm performance and draws insights on the relative importance for companies for fostering the development of governance mechanisms in business. The study examines 50 firms belonging to the benchmark index of the National Stock Exchange of India (NIFTY 50) and tracks them for over a five-year period. The study uses fixed and random effect econometric models to explore the relationship between corporate governance variables, and firm performance using both accounting returns (EVA, ROA and ROE) and market returns (MVA). The study finds that corporate governance variables significantly improve firm performance or value creation. Especially, multiple directorships, involvement of foreign institutional investors and increase in promoter holdings may significantly affect returns of the firm. The study suggests that it may be useful to foster better corporate governance practices and monitor linkages with firm performance as the effect is influenced by other control variables also.

Disclosure and corporate governance in developing countries: evidence from Ghana

2007 ◽  
Vol 22 (3) ◽  
pp. 319-334 ◽  
Author(s):  
Mathew Tsamenyi ◽  
Elsie Enninful‐Adu ◽  
Joseph Onumah
Keyword(s):  
Developing Countries ◽  
Corporate Governance ◽  
Firm Size ◽  
Ownership Structure ◽  
Developing World ◽  
Stock Exchange ◽  
Content Type ◽  
Market Capitalization ◽  
Governance Practices ◽  
Structure Dispersion

PurposeFollowing previous studies the paper seeks to use disclosure scores to examine corporate governance practices of Ghanaian listed firms. The study is motivated by the dearth of literature on corporate governance practices in the developing world despite the increasing interests in the topic in both the developed and the developing world.Design/methodology/approachThe data for the analysis are gathered from 22 listed companies on the Ghana Stock Exchange (GSE representing 95 percent of the Ghanaian market capitalization). The paper also examines the extent to which factors such as ownership structure, dispersion of shareholding, firm size, and leverage influence disclosure practices.FindingsConsistent with findings reported in studies from other developing countries the study finds that the level of disclosure in Ghana is low. Furthermore, ownership structure, dispersion of shareholding, and firm size (measured as total assets and market capitalization) all have significant effect on disclosure. However, the correlation between disclosure and leverage is insignificant.Research limitations/implicationsThe findings of the research will help policy makers and practitioners in formulating corporate governance policies. However, this research is limited because it focuses on only companies listed on the GSE. The results may therefore not be representative of all companies operating in Ghana.Originality/valueThe study is important because of the recent surge in international capital into the developing world (including Ghana) as a result of the ongoing World Bank and IMF led economic reforms. These reforms have emphasized transparency and accountability. There is therefore the need to understand corporate governance practices in these environments.

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