PurposeThis paper focused on financial constraints scenario and tax planning activities of banks in Ghana. The study explores how financial constraints could motivate the banks to pursue tax planning mechanism and the implication on tax revenue mobilisation.Design/methodology/approachThe paper followed generalised method of moments and fixed effect estimators to investigate the financial constrained-tax planning activity nexus. Simulation approach is adopted to provide financially constrained bank scenario. Besides contemporaneous analysis, sensitivity analysis is conducted to determine time varying effect. Data from all the 20 commercial banks which have operated from 2008 to 2018 were used.FindingsThe paper found that when banks are faced with financial constraints, they exhibit lower cash-effective-tax-rate. The decomposition analysis also revealed that financially constrained banks are likely to take on both short- and long-term tax planning opportunities. The paper also found evidence of persistence in the tax planning activities under financial constrained scenario.Originality/valueThis paper is one of the few studies which have extended the tax planning literature to the Ghanaian banking sector. Further novelty is seen from the development of financial constraint scenario from liquidity and solvency. Liquidity and solvency are the anchors for continuity of banking operation and sensitive to regulatory watch and sanctions. Therefore, by applying simulation approach to trigger financial constraints scenarios from these fundamental indicators reveals the extent to which commercial banks rely on tax planning opportunities to mitigate the consequence of financial constraints.

No abstract

PurposeThis study investigates information flow of market constituents and global indices at multi-frequencies.Design/methodology/approachThe study’s findings were obtained using the Improved Complete Ensemble Empirical Mode Decomposition with Adaptive Noise (I-CEEMDAN)-based cluster analysis executed for Rényi effective transfer entropy (RETE).FindingsThe authors find that significant negative information flows among sustainability equities (SEs) and conventional equities (CEs) at most multi-frequencies, which exacerbates diversification benefits. The information flows are mostly bi-directional, highlighting the importance of stock markets' constituents and their global indices in portfolio construction.Research limitations/implicationsThe authors advocate that both SE and CE markets are mostly heterogeneous, revealing some levels of markets inefficiencies.Originality/valueThe empirical literature on CEs is replete with several dynamics, revealing their returns behaviour for diversification purposes, leaving very little to know about the returns behaviour of SE. Wherein, an avalanche of several initiatives on Corporate Social Responsibility (CSR) enjoin firms to operate socially responsible, but investors need to have a clear reason to remain sustainable into the foreseeable future period. Accordingly, the humble desire of investors is the formation of a well-diversified portfolio and would highly demand stocks to the extent that they form a reliable portfolio, especially, amid SEs and/or CEs.

This paper examined the dynamics of working capital targeting and corporate life cycle (CLC) of listed manufacturing and trading firms on the Ghana Stock Exchange (GSE). Annual data spanning 2008 to 2019 and Panel Dynamic OLS, Delay and Half-life were used for the empirical analysis. The paper found that working capital varies across the stages of CLC with cash holding exhibiting low-high-high-low-low pattern while inventory holding showing U-shape. There is relatively high persistence at each stage of CLC with no sequential order of transition in the stages of life-cycle. Firms’ working capital targeting showed very high rate of adjustment to changes in stages of CLC with cash holding targeting showing the highest speed of adjustment while inventory holding being slowest to adjustment. The results imply that firms’ working capital policies are markedly interacted with the transitional mechanism of CLC and, therefore, firms should continuously evaluate working capital targets within the corporate life-cycle transition process.

No abstract