Financing decision, ownership type and financial performance of listed non-financial companies in Ghana
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Date
2023
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Publisher
Cogent Business & Management
Abstract
The study aims to investigate the nexus between financing decision,
ownership type and financial performance of listed non-financial companies in
Ghana. Data were selected from 22 listed non-financial companies on the Ghana
Stock Exchange from the years 2010 to 2021. A non-parametric estimation technique called robust OLS (Driscoll-Kraay) was employed to test the variables of interest.
Findings indicate that long-term debt funding directly affects ROA, ROE and TQ
negatively. Again, total debt funding posits a positive link with ROE and TQ.
Moreover, the direct relationship between ownership type, financing decisionsand
accounting-based performance measure (ROE) was insignificant but significant with
market-based performance measure (TQ). Subsequently, the interaction role propelled ownership (foreign and state) to be significant on the relation between
financing decision and financial performance. Largely, foreign-owned companies
play a strong positive role on the link between financing decision and financial
performance. Further, state ownership negatively affects the association between
financing decision and financial performance. The study contributes to knowledge
by considering the multiplier effect of ownership type on the relationship between
financing decisions and financial performance in Ghana. For policy implication, regulators, specifically of state interest entities, should formulate balanced frameworks
for welfare-seeking in public service delivery and performance for sustainability.
Description
Research Article
Keywords
Financing decision, ownership type, agency theory