The Impact of Debt Financing on the Performance of State-Owned Enterprises in Ghana

Abstract

The purpose of this paper is to demonstrate and recognize the link between debt financing and performance and choosing appropriate measures to evaluate and analyze the financial status of State-Owned Enterprises. The major aim is to determine the level of debt financing among State Owned Enterprises in Ghana. The study investigated the relationship between debt financing and performance of 22 State-Owned Enterprises (SOEs) over a four-year period (2014 – 2017) using regression model and Pairwise correlation matrix of the various variables utilized in the study. Many measures of firm performance such as a firm’s profitability was 0.19% for the sampled SOEs. This shows that profitability of SOEs has been declining. In addition, efficiency of state owned enterprises has been declining over the study period. This is evidenced by the decline in the total asset turnover ratio over the period. Key words: Debt Financing, Financial Performance, State-Owned Enterprises, Pairwise Correlation Matrix