Department of Banking and Finance
Permanent URI for this collectionhttp://197.255.125.131:4000/handle/123456789/23056
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Item Corporate governance and firm performance: Evidence from Ghanaian listed companies(Corporate Ownership and Control, 2006-01) Kyereboah-Coleman, A.; Adjasi, C.K.D.; Abor, J.Well governed firms have been noted to have higher firm performance. The main characteristic of corporate governance identified include board size, board composition, and whether the CEO is also the board chairman. This study examines the role corporate governance structures play in firm performance amongst listed firms on the Ghana Stock Exchange. Results reveal a likely optimal board size range where mean ROA levels associated with board size 8 to 11 are higher than overall mean ROA for the sample. Significantly, firm performance is found to be better in firms with the twotier board structure. Results show further that having more outside board members is positively related to firm performance. It is clear that corporate governance structures influence firm performance in Ghana, indeed within the governance structures the two-tier board structure in Ghana is seen to be more effective in view of the higher firm level mean values obtained compared to the one-tier system.Item Determinants of dividend payout ratios in Ghana(Journal of Risk Finance, 2006-03) Amidu, M.; Abor, J.Purpose – This study seeks to examine the determinants of dividend payout ratios of listed companies in Ghana. Design/methodology/approach – The analyses are performed using data derived from the financial statements of firms listed on the Ghana Stock Exchange during a six-year period. Ordinary Least Squares model is used to estimate the regression equation. Institutional holding is used as a proxy for agency cost. Growth in sales and market-to-book value are also used as proxies for investment opportunities. Findings – The results show positive relationships between dividend payout ratios and profitability, cash flow, and tax. The results also show negative associations between dividend payout and risk, institutional holding, growth and market-to-book value. However, the significant variables in the results are profitability, cash flow, sale growth and market-to-book value. Originality/value – The main value of this study is the identification of the factors that influence the dividend payout policy decisions of listed firms in Ghana. © 2006, © Emerald Group Publishing Limited.Item The role of non-executive directors in the Ghanaian SME sector(Corporate Board: Role, Duties and Composition, 2006-01) Sarpong-Kumankoma, E.; Amidu, M.; Abor, J.This paper reports on the role of NEDs among Ghanaian SMEs. The results of this study revealed that less than half of the SMEs sampled engage the services of NED. The study also revealed that relatively larger SMEs are more likely to employ the services of NEDs. We also found that over 80% of the SMEs with NEDs were either growing or growing rapidly. NEDs' contributions were also found to be multi-various and cut across the range of SME board functions. The study showed that most SMEs acquire NEDs mainly through informal personal contacts such as family, friends of a director, business friends rather than through formal arrangements.Item The effect of capital structure on profitability: an empirical analysis of listed firms in Ghana(Journal of Risk Finance, 2005-12) Abor, J.Purpose – This paper seeks to investigate the relationship between capital structure and profitability of listed firms on the Ghana Stock Exchange (GSE) during a five-year period. Design/methodology/approach – Regression analysis is used in the estimation of functions relating the return on equity (ROE) with measures of capital structure. Findings – The results reveal a significantly positive relation between the ratio of short-term debt to total assets and ROE. However, a negative relationship between the ratio of long-term debt to total assets and ROE was found. With regard to the relationship between total debt and return rates, the results show a significantly positive association between the ratio of total debt to total assets and return on equity. Originality/value – The research suggests that profitable firms depend more on debt as their main financing option. In the Ghanaian case, a high proportion (85 percent) of the debt is represented in short-term debt. © 2005, © Emerald Group Publishing Limited.Item Managing foreign exchange risk among Ghanaian firms(Journal of Risk Finance, 2005-09) Abor, J.Purpose – This paper reports on the foreign exchange risk-management practices among Ghanaian firms involved in international trade. The study focuses on how Ghanaian firms manage their foreign exchange risk and the problems involved in managing exchange rate exposure. It also seeks to ascertain the extent to which these firms use foreign exchange risk management techniques. Design/methodology/approach – Descriptive statistics were used in the presentation and analysis of empirical results. Findings – The results indicate that close to one-half of the firms do not have any well-functioning risk-management system. Foreign exchange risk is mainly managed by adjusting prices to reflect changes in import prices resulting from currency fluctuation, and also by buying and saving foreign currency in advance. The main problems the firms face are the frequent appreciation of foreign currencies against the local currency and the difficulty in retaining local customers because of the high prices of imported inputs, which tend to affect the prices of their final products sold locally. The results also show that Ghanaian firms involved in international trade exhibit a low level use of hedging techniques. Originality/value – The main value of this paper is the analysis of foreign exchange exposure management from the Ghanaian perspective. Relevant recommendations aimed at enhancing the foreign exchange risk-management practices among Ghanaian firms are made. The paper is useful not only to firms involved in international trade, but also to financial institutions interested in providing hedging products to these firms. © 2005, © Emerald Group Publishing Limited.Item Internationalizing SME nontraditional exporters and their Internet use idiosyncrasies(Perspectives on Global Development and Technology, 2005-06) Hinson, R.; Abor, J.This study focuses on small and medium-sized enterprises (SMEs) of Ghanaian nontraditional exporters (NTEs) in the handicrafts, agricultural, and semiprocessed/processed NTE sectors. Specifically, the study focuses on the relationship between Internet utilization and (1) age of the NTE, (2) export performance, and (3) type of export organization in internationalizing NTEs. The age of an exporting firm had a significant effect on its Internet use. Export volumes and the type of company ownership had no significant influence on Internet use among exporting firms. Analysis of age of the firm and Internet use indicated that firms that have been in existence for a long time adopt the Internet slower. © Brill Academic Publishers 2005.Item Risk Management in the Ghanaian Insurance Industry(Emerald Group Publishing Limited, 2013) Oscar, K.,; Abor, J.Purpose – The purpose of this paper is to examine the risk management practices of life assurance firms and non‐life insurance firms. Design/methodology/approach – Through a comparative case study methodology, the study assesses the state of risk management in both life assurance companies and non‐life insurance firms to determine whether they exhibit different or similar risk management practices. The results of the survey were also analyzed and compared to the principles of good practices in financial risk management. Findings – The findings of the study revealed some differences and similarities in the risk management practices of life and non‐life insurance firms. Almost all the life companies have stated their risk appetite levels, which enable them to identify which risks to absorb and which ones to transfer. But non‐life insurance firms have not laid down their risk tolerance levels explicitly. The results further revealed that the industry lacks sufficient personnel with the requisite risk management skills and that the sector does not manage risks proactively, rather they do so in a reactive response to regulatory directives. Practical implications – Effective management of risks by insurers will increase the penetration of insurance in Ghana. Social implications – Risk management is a crucial issue, not only for the survival and profitability of the insurance industry, but also for the socio‐economic growth and development of the whole economy. As major risks underwriters, insurance companies need to adopt good practices or quality measures in the management of financial risk. This is important, more so, as the industry prepares to re‐position itself to underwrite the risks in the emerging oil and gas industry of Ghana. Originality/value – Research into financial risk management in the insurance industry from the Ghanaian perspective is rare. This study is therefore timely and its findings are invaluable for the efficient management of financial risk in the insurance industry.Item Risk Management in the Ghanaian Insurance Industry, Qualitative Research in Financial Markets(2013) Akotey, J.O.; Abor, J.Purpose – The purpose of this paper is to examine the risk management practices of life assurance firms and non-life insurance firms. Design/methodology/approach – Through a comparative case study methodology, the study assesses the state of risk management in both life assurance companies and non-life insurance firms to determine whether they exhibit different or similar risk management practices. The results of the survey were also analyzed and compared to the principles of good practices in financial risk management. Findings – The findings of the study revealed some differences and similarities in the risk management practices of life and non-life insurance firms. Almost all the life companies have stated their risk appetite levels, which enable them to identify which risks to absorb and which ones to transfer. But non-life insurance firms have not laid down their risk tolerance levels explicitly. The results further revealed that the industry lacks sufficient personnel with the requisite risk management skills and that the sector does not manage risks proactively, rather they do so in a reactive response to regulatory directives. Practical implications – Effective management of risks by insurers will increase the penetration of insurance in Ghana. Social implications – Risk management is a crucial issue, not only for the survival and profitability of the insurance industry, but also for the socio-economic growth and development of the whole economy. As major risks underwriters, insurance companies need to adopt good practices or quality measures in the management of financial risk. This is important, more so, as the industry prepares to re-position itself to underwrite the risks in the emerging oil and gas industry of Ghana. Originality/value – Research into financial risk management in the insurance industry from the Ghanaian perspective is rare. This study is therefore timely and its findings are invaluable for the efficient management of financial risk in the insurance industry.Item Foreign direct investment and employment: host country experience(Macroeconomics and Finance in Emerging Market Economies 2(1): 213-225, 2008) Harvey, S. K; Abor, J.This study investigates the effect of foreign direct investment (FDI) on employment creation and wages in Ghana. A simultaneous panel regression model is used in estimating the effect FDI has on employment and wages. The results of this study indicate that FDI has a statistically significant and positive effect on employment levels in Ghana, but has an insignificant effect on wages. FDI can greatly augment domestic efforts by creating more jobs in the economy. The results clearly demonstrate that FDI flows affect employment quantitatively, but not necessarily qualitatively. The study identifies other factors including, productivity, wages, sub-sector, and location as important in influencing employment levels. Also, productivity, labour union, firm size, sub-sector, and location are noted as significant in affecting wages in Ghana. The main value of this paper is in respect of the fact that it provides insight into the effects of FDI flow on employment from a host country perspective. The study recommends that FDI should be considered as an integral part of the Ghanaian economic policy in order to spur on economic growth.