Corporate governance and company performance across Sub-Saharan African countries

Munisi, Gibson; Randøy, Trond

doi:10.1016/j.jeconbus.2013.08.003

Cited by 88 publications

(85 citation statements)

References 77 publications

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“…The use of board size as a corporate governance variable follows previous studies, such as [44,45], which suggest larger boards with high levels of links to the external environment to improve the firm's access to various resources which, in turn, positively influence corporate performance. Previous studies, such as [25,46], opine that large firms have more competitive power when compared to smaller businesses and can profit more. This study employs firm size as a control variable since it also affects the financial performance of a firm [47].…”

Section: Methodsmentioning

confidence: 99%

“…A study that examined publicly-listed firms across Sub-Saharan African countries that have adopted good corporate governance practices, and its effect on firms' financial performance and market valuation, found companies complying with good corporate governance practices achieve higher financial performance [25]. Corporate governance is the process by which a company's business and affairs are managed to enhance business prosperity and shareholder wealth [20].…”

Section: Related Literaturementioning

confidence: 99%

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Effect of Corporate Governance Structure on the Financial Performance of Johannesburg Stock Exchange (JSE)-Listed Mining Firms

Dzingai

Fakoya

2017

Sustainability

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There have been many corporate collapses and financial crises in recent years linked to a lack of effective corporate governance. The South African King IV Code of Corporate Governance recommends that corporate governing bodies should be comprised of an appropriate balance of knowledge, diversity, and independence for discharging their duties objectively and more efficiently. This study examines the effect of corporate governance structures on firm financial performance. The secondary data of selected Johannesburg Stock Exchange (JSE), Socially Responsible Investment (SRI) Index-listed mining firms' sustainability reports, and integrated annual financial statements are used. Using panel data analysis of the random effects model, we determined the relationship between board independence and board size and the return on equity (ROE) for the period 2010-2015. Results indicate a weak negative correlation between ROE and board size, and a weak, but positive, correlation between ROE and board independence. Additionally, there is a positive, but weak, correlation between ROE and sales growth, but a negative and weak relationship between ROE and firm size. The study suggests that effective corporate governance through a small effective board and monitoring by an independent board result in increased firm financial performance. We recommend that South African companies see compliance with the recommendations of the King IV Code on Corporate Governance not as a liability, but an ethical investment that may likely yield financial benefit in the long-term. Although complying with corporate governance principles does not necessarily translate into a significant economic benefit, firms should, however, continue to adopt corporate governance for ethical reasons to meet stakeholder's social and environmental needs for sustainable development.

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Section: Methodsmentioning

confidence: 99%

Section: Related Literaturementioning

confidence: 99%

Effect of Corporate Governance Structure on the Financial Performance of Johannesburg Stock Exchange (JSE)-Listed Mining Firms

Dzingai

Fakoya

2017

Sustainability

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“…This study uses accounting performance to measure company performance because accounting performance is a better measurement of performance than stock price measurement especially in developing countries stock markets. The stock market developing countries, like Tanzania, are characterized by a high degree of inefficiency, high illiquidity and stock prices which do not reflect available information [3,10,17]. In this environment the stock market information may not reflect a reasonable market value of the shares as it might be the case in stock markets in developed countries.…”

Section: Methodsmentioning

confidence: 99%

“…Generally, stock exchange is one of major sources of capital finance in the world [9]. However, in most African countries, specifically in Sub-Saharan Africa, stock exchanges opened in the 1990s, except in the cases of Kenya and Nigeria, where stock exchanges started in the year 1954 and the year 1960 respectively [10]. In addition, many countries in SubSaharan Africa have not yet established stock exchanges and many of those which have been established are not very active [10].…”

Section: Initial Public Offering and Stock Exchange Marketsmentioning

confidence: 99%

Financial Performance of Initial Public Offerings: Companies listed on Dar es Salaam Stock Exchange

Munisi¹

2017

Bus Eco J

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The purpose of this study it to examine the difference in financial performance before and after Initial Public Offerings (IPOs) in companies listed on Dar es Salaam Stock Exchange (DSE) in Tanzania. The company financial performance is measured by using financial performance ratios. Hypothesis of difference between pre-IPOs and post-IPOs financial performance is tested by using significance test on the difference between the mean score of the pre-IPOs and the mean score of the post-IPOs financial performance. The findings indicate there is significant difference between pre-IPOs and post-IPOs financial performance. Specifically, the findings indicate there is significant increase of post-IPOs financial performance. At least, the study indicates there is no significant evidence that pre-IPOs performance is higher than post-IPOs performance. However, the study indicates the results depend on measurements of performance used in the data analysis. The study is of value to various stakeholders who are interested in the financial performance of listed companies in developing countries in Sub-Sahara Africa and Tanzania in particular. These findings are useful to current and potential investors in stock exchanges in developing countries in general and DSE in particular. The findings have policy implication for roles of the regulators of stock market, shareholders monitoring and governance of listed companies, as results indicate at least performance of listed companies do not deteriorate after IPOs. This has implication for attraction of investment from both domestic and foreign investors because indicators of better performance after IPOs increase the confidence of investors as they become more optimistic on future financial performance of IPOs.

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“…Many academicians are interested to conduct study examining the impact of good corporate governance on the firm performance (Mashayekhi and Bazaz, 2008;Munisi and Randoy, 2013;Al-Najjar, 2014;Zagorchev and Gao, 2015;Balachandran and Faff, 2015;Subramanian, 2015;Abdallah and Ismail, 2016;Akbar et al, 2016;Ararat, Black and Yurtoglu, 2016;Chauhan, Lakshmi and Dey, 2016;Prommin et al, 2016). Good corporate governance could reduce the agency cost and make better protection for shareholder againts uncertainty in the future (Balachandran and Faff, 2015).…”

Section: Introductionmentioning

confidence: 99%

Could independent board, board meeting, audit committee, and risk committee improve the asset quality and operational performance a study of listed banks in Indonesia

Chou¹,

Buchdadi²

2017

Pressacademia

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Purpose -This study examines the impact of independent board of directors, board meeting, audit committee, and risk committee on bank practise in Indonesia. Methodology -Asset quality is measured by non-performing loans (NPL), and operational performance is measured by operational expense ratio (BOPO). While, as independent variables we used some good corporate governance variables including independent board (IB), the annual board meeting (BM), the percentage of annual board of director meeting attendance, the annual board-executive meeting (BEM), the percentage of annual board-executive meeting attendance, Audit Committee (AC), Audit Committee Meeting (ACM), the percentage of annual audit committee meeting attendance, Risk Committee (RC), Risk Committee Meeting (RCM), and the percentage of annual risk committee meeting attendance. The data are listed banks in Indonesian Capital Market during 2013-2015 using unbalanced panel data two stage least square (2SLS) regression. Findings-The findings reveal that independent board will improve the prudence principal of the bank. While the board of directors meeting will enhance the operational performance of the bank.In addition, the number of the audit committee will make better operational performance, while the number of meeting will improve the non-performing loan. Conclusion-Regarding these results the central bank and also the other stakeholders could maintain the role of the independent board of directors as well as the number of high quality annual meeting of the board. In addition, this study also reveals the role of the audit committee in banking business. This study supports the agency theory that monitoring activity will make the firm better performance.

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Corporate governance and company performance across Sub-Saharan African countries

Cited by 88 publications

References 77 publications

Effect of Corporate Governance Structure on the Financial Performance of Johannesburg Stock Exchange (JSE)-Listed Mining Firms

Effect of Corporate Governance Structure on the Financial Performance of Johannesburg Stock Exchange (JSE)-Listed Mining Firms

Financial Performance of Initial Public Offerings: Companies listed on Dar es Salaam Stock Exchange

Could independent board, board meeting, audit committee, and risk committee improve the asset quality and operational performance a study of listed banks in Indonesia

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