Impact of Corporate Control on Corporate Value: Evidence from Nairobi Securities Exchange

Onguka, David; Kaijage, Eramus S.; Iraya, Cyrus; Kisaka, Sifunjo E.

doi:10.13189/ujaf.2019.060402

Cited by 2 publications

(2 citation statements)

References 24 publications

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“…Asset tangibility (ASTAN) which is the ratio of fixed assets to total assets is also included. Tian and Estrin (2008); Irungu et al (2018); Onguka et al (2018), posit that firms with higher asset tangibility tend to operate in more traditional industries where growth opportunities are relatively limited.…”

Section: Control Variablesmentioning

confidence: 99%

Corporate Governance Mechanisms, Ownership and Firm Value: Evidence from Listed Chinese Firms

Kong

Famba

Chituku-Dzimiro

et al. 2020

IJFS

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This study analyzes corporate ownership as a corporate governance mechanism and its role in creating firm value. Previous research shows that there is no convergence on the firm-value corporate ownership relationship. Most research in this area takes a cross national approach ignoring the uniqueness of each institutional setting particularly those of emerging nations. Using a unique firm level dataset, we investigate how corporate control nature and ownership concentration affect the value of Chinese listed firms. First, non-state owned control is associated with a higher Tobin’s Q while a negative premium is found for state owned. Using the hybrid and the correlated random effects model we confirm a U-shaped non-linear relationship between ownership concentration and Tobin’s Q, implying that firm value first decreases and then increases as block holders own more shares. Further investigation reveals that the negative effect of ownership concentration is weaker when a firm equity nature is non-state owned enterprises (non-SOEs) compared to state-owned enterprises (SOEs). While ownership concentration appears to be an efficient mechanism for corporate governance its effect is weaker for SOEs compared to non-SOEs. The results support privatization of SOEs, sound reforms such as the split share structure reform as crucial for the development of China’s stock market.

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Section: Control Variablesmentioning

confidence: 99%

Corporate Governance Mechanisms, Ownership and Firm Value: Evidence from Listed Chinese Firms

Kong

Famba

Chituku-Dzimiro

et al. 2020

IJFS

View full text Add to dashboard Cite

show abstract

“…There has been a general perception among banks that credit exposure to the agricultural sector contributes to a bank's failure or its success [13]. Research has however proved that credit exposure to farmers does not necessarily contribute to failures in the banking industry because loans are negotiated in a competitive environment and thus banks have learned to employ credit risks model to hedge against defaults [16].…”

Section: Literature Reviewmentioning

confidence: 99%

Effect of Selected Factors on Non-performing Agricultural Loans in Commercial Banks in Kenya

Kibet¹,

Nyaoga²,

King’wara³

2020

IJFBR

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Commercial banks plays a crucial role in the Agricultural sector in advancing farmers affordable credit to improve their productivity, enhancing their food security, and expanding their income. Financing of the sector however continues to get the lowest levels of credit in Kenya compared to other sectors due to poor loan repayment. This study aimed to establish the effect of macro-economic factors of Gross Domestic Product (GDP), Real Effective Exchange Rate, and the Lending rate on Agricultural Non-performing Loans (NPL) and to assess the effect of Growth in Loan Portfolio on Agricultural NPL. Secondary data relating to Commercial Banks lending to the agricultural sector for a period of 7 years from 2011 to 2017 was collected from forty-two Commercial Banks in Kenya. Results showed that agricultural NPL had a strong positive correlation with real GDP (0.836, p<0.001), the Real Effective Exchange rate (0.865, p<0.001), and a weak inverse correlation with the average Bank Lending rate (-0.48, p<0.01). The study concluded that commercial banks should pay close attention to the two factors (Gross Domestic Product and Real Effective Exchange rate) when providing loans to the agricultural sector to reduce the level of impaired loans. The banks active in agricultural lending should, therefore, take the performance of the real economy into account when extending loans given the reality that loan delinquencies are likely to be higher during periods of economic boom as suggested by the study results. Equally Commercial banks should trade with high prudence to curb a possible impairment due to reckless lending and over-estimation of the borrower's ability to pay back. They should constantly review the complexity and diversity of the new loans to the agricultural sector periodically like quarterly, and do aging analysis to ensure that the growth in agricultural loans do not serve to window dress the portfolio at risk percentage while the actual amounts in default are increasing.

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Impact of Corporate Control on Corporate Value: Evidence from Nairobi Securities Exchange

Cited by 2 publications

References 24 publications

Corporate Governance Mechanisms, Ownership and Firm Value: Evidence from Listed Chinese Firms

Corporate Governance Mechanisms, Ownership and Firm Value: Evidence from Listed Chinese Firms

Effect of Selected Factors on Non-performing Agricultural Loans in Commercial Banks in Kenya

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