PurposeThe purpose of this paper is to examine the effect of ownership structure and corporate governance on capital structure decisions of firms on the Ghana Stock Exchange (GSE).Design/methodology/approachTo analyze the impact of ownership structure and corporate governance on firms' financing decisions, unbalanced panel data covering a period from 2002 to 2007 is employed using the seemingly unrelated regression approach to mitigate the effects of multicollinearity among the regressors.FindingsThe regression results reveal that managerial shareholding significantly positively influences the choice of long‐term debt over equity. Among the corporate governance variables, board size is found to be positively and statistically significantly related to capital structure choices. Firm level factors such as volatility in earnings, asset tangibility, dividend payout ratio and profitability are significant determinants of corporate capital structure decisions on the GSE. The findings are largely consistent with theories of capital structure decisions observed in the literature.Originality/valueThe main value of this paper is to provide a comprehensive understanding of the impact of forms of ownership and other governance practices on capital structure decisions of firms from an emerging market perspective.
PurposeThe purpose of this paper is to investigate the effects of investment opportunities and corporate finance on dividend payout policy.Design/methodology/approachThis issue is tested with a sample of 34 emerging market countries covering a 17‐year period, 1990‐2006. Fixed effects panel model is employed in our estimation.FindingsA significantly negative relationship between investment opportunity set and dividend payout policy is found. There are, however, insignificant effects of the various measures of corporate finance namely, financial leverage, external financing, and debt maturity on dividend payout policy. Profitability and stock market capitalization are also identified as important in influencing dividend payout policy. Profitable firms are more likely to support high dividend payments to shareholders. However, firms in relatively well‐developed markets tend to exhibit low dividend payout policy.Originality/valueThe main value of the paper is in respect of the fact that it uses a large dataset from emerging market countries. The results generally support existing literature on investment opportunity set and dividend payout policy.
PurposeThe purpose of this paper is to examine the interaction between corporate governance, ownership structure, cash holdings, and firm value on the Ghana Stock Exchange.Design/methodology/approachA multiple regression approach using the seemingly unrelated regression to mitigate the problems of multicollinearity between the cash‐holding variable and other control variables is adopted.FindingsBoard size is found to be positively and statistically significantly related to share price among the corporate governance variables. However, a significant relationship between inside ownership and share price is not found. The results also indicate that additional units of cash holdings do not have a statistically significant influence on share price. Finally, leverage and income volatility are found to be significant determinants of share price.Originality/valueThis is the first of its kind in the country that considers the impact of corporate governance, ownership structure, and firm value on the Ghana Stock Exchange (GSE).
PurposeThe purpose of this paper is to document the effect of ownership structure and corporate governance on bank efficiency in the Ghanaian banking industry.Design/methodology/approachThe author applies both accounting data and efficiency measures from the period 1999‐2007 via panel data analysis. Efficiency is measured by computing distances from the stochastic frontiers of estimated translog cost and profit functions. These efficiency measures are regressed on ownership and governance variables with dummy variables for bank types.FindingsThe results show that foreign banks are more cost‐efficient than domestic banks, but not necessarily more profit‐efficient. Nevertheless, foreign banks are more profitable than domestic banks and enjoy better quality loans. Managerial ownership leads to the cost inefficiency of banks. Banks with inside ownership are unprofitable overall but maintain a high loan quality. Governance (a larger board size) strongly improves profit efficiency but slightly worsens banks' cost efficiency. Finally, the capital adequacy ratio and bank size are both significant predictors of bank efficiency in Ghana.Originality/valueFew, if any, studies have been carried out in the Ghanaian banking industry.
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