Corporate governance, ownership structure, cash holdings, and firm value on the Ghana Stock Exchange

Isshaq, Zangina; Bokpin, Godfred A.; Onumah, Joseph Mensah

doi:10.1108/15265940911001394

Cited by 87 publications

(106 citation statements)

References 49 publications

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“…This literature covers both developed and developing economies: for example, Weir et al (2002) and Mura (2007) for the UK; Bozec (2005) for Canada; Chen et al (2008) and Field et al (2013) for the US; and Ghosh (2006), Isshaq et al (2009) and Mangena et al (2012) for developing economies. However, the results are mixed.…”

Section: Governance Index and Performancementioning

confidence: 99%

The governance-performance relationship: evidence from Ghana

Owusu

Weir

2016

JAAR

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Purpose The purpose of this paper is to investigate the impact corporate governance, measured by a governance index, on the performance of listed firms in a developing economy, Ghana. It also evaluates the effect of the introduction of a code of corporate governance on compliance rates across Ghanaian firms as well as assessing the impact of the code’s introduction on firm performance for the study period 2000-2009. Design/methodology/approach The paper develops a Ghanaian corporate governance index (GCGI) containing 33 provisions to measure corporate governance quality during the pre-code and the post-code sub-periods. The authors use a panel data analytical framework and fixed effects regressions to analyse the governance-performance relationships. Findings After controlling for endogeneity, the authors find a statistically significant and positive relationship between the GCGI and firm performance. The analysis shows evidence of a statistically significant increase in the degree of compliance with the Ghanaian Code from the pre-2003 sub-period to the post-2003 sub-period. The authors also find that the introduction of the code has led to improved firm performance. However, not all elements of corporate governance appear to have a significant effect on firm performance. Research limitations/implications One limitation of this study is the development of a corporate governance index. The binary coding used to construct the GCGI may not reflect the relative importance of the different corporate governance provisions. This means that all elements included in the index are given equal weighting. Future research may assign weights to each of the corporate governance provisions but this may have the disadvantage of making subjective judgements relative to the importance of each corporate governance provision recommended by the Ghanaian Code. Practical implications These results have important implications for both policy makers and companies. For policy makers, it is encouraging for the development of a code of corporate governance to regulate firms rather than enforcing rigid laws that may not be value relevant. For companies, the improvement in compliance with a code of corporate governance can provide a means of achieving improved performance. Originality/value This paper adds to the limited evidence on the governance-performance relationship in developing economies and in particular it analyses the role of a governance index. It is also the first paper to compare the pre- and the post-code governance index-performance relationship in an African or developing country.

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Section: Governance Index and Performancementioning

confidence: 99%

The governance-performance relationship: evidence from Ghana

Owusu

Weir

2016

JAAR

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“…Recent research on determinants of cash holding has analysed companies operating in developed countries (Almeida et al, 2004;Dittmar, 2004;Shah, 2011) as well as in developing countries (Dittmar & Mahrt-Smith, 2007;Dittmar, MahrtSmith & Servaes, 2003;Ferreira & Vilela, 2004;Garcia-Terual & Martinez-Solano, 2008;Guney, Ozkan & Ozkan, 2007;Harford, Mansi & Maxwell, 2008;Isshaq, Bokpin & Onumah, 2009;Jensen, 1986). A research study conducted by Hall, Mateus and Mateus (2014), which also included a sample of companies from the Republic of Serbia, has analysed the differences in the levels of cash holdings between public and private companies, as well as differences in the levels of cash holdings between companies operating in developed markets and those operating in developing markets.…”

Section: Literature Reviewmentioning

confidence: 99%

Analysis of the determinants of corporate cash holdings: Examples from companies in Serbia

Račić¹,

Stanišić²

2017

Eur J Appl Econ

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Abstract:In this study, we aimed to analyse the empirical determinants of cash holdings on the sample of non-financial companies operating in the Republic of Serbia. For that purpose, dynamic panel data models were estimated by utilising the generalised method of moments for the period from 2008 to 2013. The econometric analysis indicates that companies with higher cash flow hold more cash in their assets. Larger companies as well as companies with more liquid assets and higher turnover coefficients tend to reduce their cash levels. According to the results, companies operating in the Republic of Serbia tend to hold the optimal level of cash and prefer internal sources of financing, which is in line with the principles of trade-off theory and pecking order theory.

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“…Cash is one of the most susceptible to malicious behavior by management (Isshaq, Bokpin and Onumah, 2009). CHs are funds readily available for investment in physical assets and for distribution to investors.…”

Section: Introductionmentioning

confidence: 99%

Corporate Governance and Cash Holdings: Empirical Evidence from an Emerging Country, Sri Lanka

Ajanthan¹,

Kumara²

2017

ijafr

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This study examines the influence of corporate governance practices on cash holdings of Sri Lankan listed companies. It develops hypotheses about the relationship between cash holding and corporate governance practices such as size, frequency of meetings, independence, independent chair and gender diversity. Using multiple regression analysis on data collected from the corporate annual reports of 90 listed companies, the study finds that corporate governance practices such as board size and gender diversity have a significant negative influence on cash holdings as well as independent chair has a significant positive influence on cash holdings. However, there is no evidence that board meetings affect cash holding in Sri Lankan companies. The study contributes to the literature on the factors that make variation in the amount of cash holding of the listed company and it may be useful for financial managers, business analyst, financial controller, operations managers, investors, financial management consultants and other stakeholders.

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Corporate governance, ownership structure, cash holdings, and firm value on the Ghana Stock Exchange

Cited by 87 publications

References 49 publications

The governance-performance relationship: evidence from Ghana

The governance-performance relationship: evidence from Ghana

Analysis of the determinants of corporate cash holdings: Examples from companies in Serbia

Corporate Governance and Cash Holdings: Empirical Evidence from an Emerging Country, Sri Lanka

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