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Browsing Business School by Author "Abor, J."

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    Corporate Governance and Financing Decisions: A Study of Ghanaian Listed Firms
    (University of Ghana, 2013-06) Yussif, T.J.; Abor, J.; Bokpin, G.A.
    Earlier studies on the Ghana stock exchange failed to consider the influence of institutional ownership and board committee on the financing decisions of the firms. This study examines the impact of institutional ownership and board committee on capital structure decisions. The study also examines the nature of corporate board and financing pattern of the firms for the period under investigation. Twenty nine (29) firms out of total number of thirty four (34), on the Ghana Stock Exchange were used for the periods 2004 to 2011 based on the availability of data. Secondary data on board and ownership structure were obtained from the annual reports of firms and the Ghana Stock Exchange facts book. Information on best governance practices were also from the annual reports and guidelines of Ghana‟s Securities and Exchange Commission. Using unbalance data with a maximum and minimum period of 8 and 3 years respectively, the fixed effect regression technique was used to examine the effect of board characteristics and ownership structure on financing decisions of the firms. A positive and significant relationship was found in the case of board size, board composition, institutional ownership and firm type. CEO duality, board committee and profitability register negative relationships with capital structure. Managerial ownership, growth and firm size recorded not significant relationships with financing decisions. The result suggests that firms on the Ghana Stock Exchange pursue high debt policy with higher proportion of outside directors, larger board size, and higher percentage of institutional shareholdings. However, lesser number of oversight committees and one tier leadership style are associated with lower debt levels. This study therefore reaffirms that corporate governance influences financing decisions of Ghanaian listed firms. The findings of the study also shows that, the board structure of firms on the Ghana Stock Exchange is dominated by non executive directors, larger board size, two tier leadership structure and an average of two board committees. Again the ownership structure is dominated by institutional holdings. As indicated by this work, the capital structure of Ghanaian listed firms is likely to follow the pecking order theory. To access debt financing, the study recommends firms to open up for institutional investors, increase the board size, with greater percentage of it being outside directors. However increase in board size beyond a certain point would reduce debt. Also, the number of oversight board committees must be maintained at a desired minimum. Generally, it was observed that listed firms complied with rules and directives of the regulatory authorities and therefore to ensure best practices in corporate governance in the country as a whole, more firms have to be encouraged to list on the stock exchange so that regulation can compel them to exhibit the best of conducts.
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    Defined Contribution and Defined Benefits: Inherent Risks and Risk Transfers in Ghanaian Pension Schemes
    (University of Ghana, 2016-02) Donkor, F.; Ofosu-hene, E.; Abor, J.; University of Ghana, College of Humanities, Business School, Department of Banking and Finance
    Ghana, due to various economic and demographic factors, also growing concern among the general populace on the adequacy of pension benefits has undergone pension reform. The new Ghanaian Pension scheme set with the objective of securing pension income of plan members is a combination of the Defined Benefit (DB) and a Defined Contribution (DC) pension plans in a three-tier structure. This thesis examines three major issues affecting pension provision in Ghana. That is, the risks associated with pension schemes, and the effect of the structural and parametric changes of the new scheme on pension provision. Thirdly, a demonstration of the adequacy of pension benefits from the new scheme relative to that receivable prior to the reform considering investment risk (market risk). A simulation methodology was adopted using 10,000 simulations of risk scenarios of a plan member over a projected 40yr contributory period to demonstrate whether pension benefits under the new Pension scheme was adequate relative to a DB benchmark as was the case prior to reform. Three major conclusions are drawn; firstly, a DC pension plan may promise higher benefits relative to a DB benchmark, however, it is subject to more risk hence pension ratios are less predictable. Secondly, the asset allocation strategy used by fund managers has an influence on pension provision and one with high equity weightings in investment delivers higher benefits compared to that with less weight in equities as prescribed by the National Pensions Regulatory Authority (NPRA). Lastly, contributions to Tier 3 of pension scheme by formal sector plan members towards a personal pension or provident fund may significantly increase pension benefits. Keywords: Defined Contribution pension plan; Defined Benefit Pension Plan; Asset-allocations strategy; Social Security and National Insurance Trust (SSNIT)
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    Does financial inclusion Spur Financial Development in Africa?
    (University of Ghana, 2014-07) Abor, J.; Osei, K.; Mensah, Lord
    This study assessed the impact of financial inclusion on financial development in Africa. Using cross-section data covering forty-two African countries, the study uses regression analysis, to establish how the banking sector development is affected by financial inclusion. In this study, financial development used as the dependent variable is proxied by the ratios of money supply, bank credit and private credit to Gross Domestic Product. The independent variables include financial inclusion measured with two variables (accounts used to receive wages, and individual formal account) obtained by carrying out principal component analysis of fourteen (14) measures of financial inclusion. The other independent variables used are inflation, financial openness, a measure of institutional quality and natural resource endowment of the country. The empirical result revealed that higher levels of financial inclusion lead to financial development in the banking sector. In addition, institutional quality were found to have a positive effect on financial development whiles inflation and natural resource rents were found to have negative effects on financial development. Based on the findings of this study, it is recommended that the government, policy makers and the banks put in place delebrate measures to provide unrestricted access to financial services to the people. Also, whilst promoting the financial inclusion phenomenon, there is the need to maintain strong institutions and at the same time prudent measures to mitigate economic instability.
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    The Role of Fixed Income in Pension Scheme Investment in Ghana
    (University of Ghana, 2014-07) Afari, K.B.; Ofosu-Hene, E.; Abor, J.; University of Ghana, College of Humanities Business School Department of Marketing and Consumer Management
    Pension scheme providers in Ghana adopt different asset allocation (the proportion of pension funds that need to be invested into different assets like equities and bonds) as an investment strategy. For instance, SSNIT seems to adopt a 60% bond allocation (fixed income investment) and 30% equity allocation (non-fixed income investment) as an investment strategy over the last decade. This study investigates the role of fixed income in pension schemes investment in Ghana by specifically looking at the asset allocation and the initial investment required to make the scheme solvent in the future at a specified high probability after matching all liabilities in Ghana. This thesis examines some basic risk and return characteristics of historical data. The best asset to invest in without matching liabilities as well as the liabilities paid by pension schemes in the future is also investigated. The asset allocation and the minimum initial fund required to make a scheme solvent at a specified probability in the future after matching liabilities using a stochastic asset-liability model under the closed pensioners’ portfolio is also examined. The stochastic asset model (mean-variance model) is adopted in the projection of returns of asset classes as well as the determination and projection on liabilities paid by pension schemes over a 40-year period. The investment strategy is examined using a stochastic asset-liability model. Looking at the assets-only analysis of pension schemes without matching their liabilities, equity appears to be an attractive asset classes to invest in. However, considering asset-liability analysis, bonds (specifically One-year bonds) are the best-matched liabilities since they have good risk-adjusted returns and are less risky. The asset allocation moves from equity towards bonds (specifically One-year bonds) at a higher solvency level and the minimum investment required also increases as the solvency level increases. This study has a significant implication for adopting the appropriate investment strategy by pension fund managers.