Search results

1 – 10 of 16
Open Access
Article
Publication date: 2 September 2019

King Carl Tornam Duho and Joseph Mensah Onumah

The purpose of this paper is to examine the impact of intellectual capital and its components on bank diversification choice.

3791

Abstract

Purpose

The purpose of this paper is to examine the impact of intellectual capital and its components on bank diversification choice.

Design/methodology/approach

Both asset and income diversification are computed and an unbalanced panel data set of 32 banks covering the period 2000–2015 have been used. The panel corrected standard error regression has been used to account for serial correlation and heteroscedasticity.

Findings

The study found that intellectual capital determines the choice of diversifying. Precisely, intellectual capital motivates asset diversity but it dissuades income diversification. Human capital and structural capital are major components that determine asset diversity decisions. Income diversification decision, in this case to choose a focus strategy, is determined by human capital. This gives credence for the human capital theory in Ghana. Competition encourages a focus strategy. Bank size and leverage enhances income diversification while stock exchange listing and government ownership fosters the focus strategy.

Practical implications

Diversification strategy, knowledge base of staff, corporate governance and internal control have been considered as factors leading to the collapse of some Ghanaian banks in 2017–2018. The study provides relevant insights for regulators, decision support units and corporate boards. Intellectual capital and value added metrics should be used for modelling and decision making as they have value relevance.

Originality/value

This is a premier study that has examined the nexus between diversification strategy and intellectual capital in banks.

Details

Asian Journal of Accounting Research, vol. 4 no. 2
Type: Research Article
ISSN: 2443-4175

Keywords

Article
Publication date: 19 June 2020

King Carl Tornam Duho, Joseph Mensah Onumah, Raymond Agbesi Owodo, Emmanuel Tetteh Asare and Regina Mensah Onumah

The study examines the impact of risk on the profit efficiency and profitability of banks in Ghana.

Abstract

Purpose

The study examines the impact of risk on the profit efficiency and profitability of banks in Ghana.

Design/methodology/approach

Data envelopment analysis was used to estimate profit efficiency scores and accounting ratios were used to measure profitability. The panel corrected standard error regression was used to assess the nexus using a dataset of 32 banks from 2000 to 2015.

Findings

The paper found that the Ghanaian banking industry exhibits a variable return to scale property, suggesting that average costs change with output size. Profit efficiency score for banks closer to the efficiency frontier is 61%. Credit risk is significant in enhancing profit efficiency and return on equity. Market risk is relevant in improving profit efficiency, return on asset and asset turnover. To drive profitability, bank managers have to be committed to effective liquidity risk, insolvency risk and capital risk management. Operational risk reduces shareholders' returns. The impact of size, age, stock exchange listing, cost efficiency and competition have are all been discussed extensively.

Practical implications

The findings contribute to the knowledge on the risk-performance nexus and provide information that is valuable to academics, bankers and regulators for policy formulation. The findings are relevant to the newly established Financial Stability Council.

Originality/value

This paper appears to be among the premier attempts to examine the effect of various risk types identified in the Basel III framework on bank performance in Africa.

Details

Journal of Economic and Administrative Sciences, vol. 36 no. 4
Type: Research Article
ISSN: 1026-4116

Keywords

Article
Publication date: 20 August 2019

King Carl Tornam Duho, Joseph Mensah Onumah and Raymond Agbesi Owodo

The purpose of this paper is to investigate the impact of diversification on profitability, profit efficiency and financial stability of Ghanaian banks.

Abstract

Purpose

The purpose of this paper is to investigate the impact of diversification on profitability, profit efficiency and financial stability of Ghanaian banks.

Design/methodology/approach

The authors employed a panel regression technique on a data set of 32 banks from 2000 to 2015. The data envelopment analysis is used to compute profit efficiency scores with credit risk accounted for.

Findings

The results suggest that income diversification decreases profit, profit efficiency and financial stability. The impact on profit and stability is U-shaped. The impact of asset diversification was found to be insignificant. High competition reduces both profitability and profit efficiency which is inconsistent with the quiet-life hypothesis of Hicks (1935), but financial stability increases with competition. High investment in tangible assets is associated with poor performance. Non-banking financial institutions that later became universal banks are not financially stable. Competition, size, age, government ownership and leverage which are controlled for and a sensitivity analysis conducted also provided relevant insights.

Practical implications

The results are relevant in understanding the events in the Ghanaian banking industry in 2017–2018. Income diversification strategy is essential in determining the performance of banks. Management has to figure out the extent and scope of their diversification to benefit from the strategy.

Originality/value

The authors examined diversification from the view-point of both the income statement and statement of financial position while most prior studies focused on only one aspect. The study is one of the few studies that employed the risk-adjusted profit efficiency measure in Sub-Saharan Africa.

Details

International Journal of Managerial Finance, vol. 16 no. 1
Type: Research Article
ISSN: 1743-9132

Keywords

Open Access
Article
Publication date: 7 September 2020

Nicholas Asare, Margaret Momo Laryea, Joseph Mensah Onumah and Michael Effah Asamoah

This study examines the causal relationship between intellectual capital and asset quality of banks in Ghana.

2134

Abstract

Purpose

This study examines the causal relationship between intellectual capital and asset quality of banks in Ghana.

Design/methodology/approach

Using annual data extracted from audited financial statements of 24 banks from 2006 to 2015, a ratio of non-performing loans to gross loans and advances is employed to estimate asset quality growths while the value-added intellectual coefficient by Pulic (2008, 2004) measures intellectual capital. The panel-corrected standard errors estimation technique is used to estimate panel regressions with asset quality as the dependent variable.

Findings

Asset quality of banks in Ghana is generally not affected by intellectual capital. However, when intellectual capital is divided into its components, the study indicates that there are significant positive relationships between asset quality and two components of intellectual capital. Thus, structural capital and human capital efficiencies positively affect the asset quality of banks.

Practical implications

The findings of the study implore managements of banks to increase structural and human capital investments and efficiencies to improve asset quality. Furthermore, the results have direct implications on developments in financial markets in emerging economies.

Originality/value

The study analyses the link between typical intellectual capital and asset quality of banks which is yet to be empirically examined in an emerging banking market.

Details

Asian Journal of Accounting Research, vol. 6 no. 1
Type: Research Article
ISSN: 2443-4175

Keywords

Article
Publication date: 6 August 2020

King Carl Tornam Duho, Cletus Agyenim-Boateng, Emmanuel Tetteh Asare and Joseph Mensah Onumah

The purpose of this study is to examine the convergence and determinants of anti-corruption disclosures of extractive firms in Africa.

Abstract

Purpose

The purpose of this study is to examine the convergence and determinants of anti-corruption disclosures of extractive firms in Africa.

Design/methodology/approach

The study uses an unbalanced panel data of 27 firms operating in 5 African countries covering the period 2006 to 2018. Corporate data is collected from the global reporting initiative (GRI) database. The study uses an index to measure overall disclosure and individual items are coded as binary. The study uses fixed effects, panel logistic and panel-corrected standard error regression, depending on the type of dependent variable used.

Findings

The results indicate that the determinants of anti-corruption disclosure are membership in the United Nations global compact (UNGC) and Extractive Industry Transparency Initiative, multi-national enterprise status, corruption perception index and human development index (HDI). Specifically, UNGC membership and multi-national status enhance the disclosure on corruption analysis. Countries with a high prevalence of corruption tend to disclose more on corruption analysis. Disclosure on corruption training is high among firms that are UNGC signatories, countries with a high HDI and countries with a high prevalence of corruption. There is a weak effect of firm-level, industry-level and country-level factors on disclosures on corruption response.

Research limitations/implications

The study provides insights on the use of GRI 205: Anti-Corruption, which has relevant implications for practitioners, policymakers and the academic community.

Originality/value

This study is premier in exploring anti-corruption disclosure with a special focus on extractive firms in Africa. It is also unique in providing a test of both beta and sigma convergence among the firms.

Details

Journal of Financial Crime, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1359-0790

Keywords

Open Access
Article
Publication date: 24 December 2021

Nicholas Asare, Francis Aboagye-Otchere and Joseph Mensah Onumah

This study examines the nature of the relationship between board structures (BSs) and intellectual capital (IC) of banks in Africa.

Abstract

Purpose

This study examines the nature of the relationship between board structures (BSs) and intellectual capital (IC) of banks in Africa.

Design/methodology/approach

Using annual data from financial statements of 366 banks from 26 African countries from 2007 to 2015, the study estimates IC using the value-added intellectual coefficient (VAIC) and BSs using board size, board independence and board gender diversity. The system generalized method of moments and panel-corrected standard error estimation strategies are used to estimate panel regressions.

Findings

There is a significant negative relationship between board independence and intellectual capital. The results also indicate that the IC of banks does not depend on board size and board gender diversity.

Practical implications

The study's findings provide evidence of the extent to which BSs have been instituted to support investments in intellectual capital as a means of improving the performance of banks in Africa.

Originality/value

This study provides some empirical evidence from Africa's banking sector to justify that banks with better IC have boards that are less independent. This study is one of the few studies that employs many countries' data.

Details

Asian Journal of Economics and Banking, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2615-9821

Keywords

Article
Publication date: 25 January 2021

Emmanuel Tetteh Asare, King Carl Tornam Duho, Cletus Agyenim-Boateng, Joseph Mensah Onumah and Samuel Nana Yaw Simpson

This study aims to examine the effect of anti-corruption disclosure on the profitability and financial stability of extractive firms in Africa. It also tests the…

Abstract

Purpose

This study aims to examine the effect of anti-corruption disclosure on the profitability and financial stability of extractive firms in Africa. It also tests the convergence of profitability and financial stability.

Design/methodology/approach

The study uses an unbalanced panel data of 27 firms operating in five African countries covering the period 2006–2018. Anti-corruption assessment is done in line with GRI 205: Anti-Corruption. Profitability is measured using the return on asset and return on equity, whereas the z-score measures financial stability. The study uses the panel-corrected error regression technique for estimation.

Findings

There is evidence that corruption disclosure reduces the financial stability of firms. Disclosures on corruption analysis and corruption training are the main factors driving the reduction in financial stability. The effect on profitability is not significant except in the case of disclosure on corruption response, which also reduces profitability. There is strong statistical evidence to suggest that profitability and financial stability of extractive firms converge. This suggests that less-performing firms catch up with high performers.

Research limitations/implications

The study has relevant implications for practitioners, policymakers and the academic community. The study uses data that is skewed towards large extractive firms.

Originality/value

This study is premier in exploring the effect of anti-corruption disclosure on performance metrics among extractive firms in Africa. It is also unique in providing a test of both beta and sigma convergence of performance among the firms.

Book part
Publication date: 1 January 2008

Adom Adu-Amoah, Mathew Tsamenyi and Joseph Mensah Onumah

Purpose of paper – Rural Banks (RBs) are unit banks owned by members of the rural community through the purchase of shares and are licensed to provide financial…

Abstract

Purpose of paper – Rural Banks (RBs) are unit banks owned by members of the rural community through the purchase of shares and are licensed to provide financial intermediation in rural areas of Ghana. This paper reports on the external and internal mechanisms through which corporate governance is maintained in these banks.

Design/methodology/approach – The findings reported in the paper are based on evidence obtained from a review of relevant documents and interviews with the managers of selected RBs.

Findings – The corporate governance system in the RBs is mainly a rational western model recommended by the World Bank and implemented by the Central bank of Ghana. Under this model corporate governance is expected to be maintained externally through regulatory agencies (the Central Bank of Ghana and the Association of Rural Banks) and internally through the respective Boards of Directors. However, we observe that because of the locations and ownerships of these banks, board appointments and decisions are often embedded in local political and social relations. This affects the independence of the boards and impacts on their role in maintaining corporate governance.

Research limitations/implications – We argue that any attempt to design corporate governance systems in these banks without taking these social and political factors into consideration is likely to lead to failure. This is particularly important given that the World Bank and other international donors are continuously proposing rational western models of governance to institutions in the developing world, such as the RBs. Given that these organizations operate under different sets of environmental conditions, there is likely to be differences between the actual and the idealized corporate governance systems.

Originality/value of paper – The study is important because of the role the rural banks play in the socio-economic development of Ghana. Several other developing countries have established similar institutions to support the development of the informal sector through the provision of microcredit. The research will contribute to the design of appropriate corporate governance systems so as to improve the overall contributions of these institutions.

Details

Corporate Governance in Less Developed and Emerging Economies
Type: Book
ISBN: 978-1-84855-252-4

Book part
Publication date: 1 December 2009

Joseph Mensah Onumah, Samuel Nana Yaw Simpson and Adafula Babonyire

Purpose – The audit expectation gap has been the subject of research in many countries and in different forms. However, such research of the nature and dimensions of the…

Abstract

Purpose – The audit expectation gap has been the subject of research in many countries and in different forms. However, such research of the nature and dimensions of the gap has been limited, if done at all, in the developing countries of West Africa. This study assesses its existence and investigates the factors that have been influencing it.

Design/methodology/approach – Survey responses from questionnaires administered to preparers and users of audited financial statements were analysed.

Findings – Financial statements users have significantly different perceptions about assurances provided by auditors’ reports, whereas the views of company accountants are quite close to those of auditors.

Originality/value – Although the validity of the results of this for international comparison may be limited by the number of financial statements users covered and the socio-cultural characteristics of the Ghanaian business environment, it should be recognised as one of the few to investigate the existence and nature of the expectation gap in the context of a developing country in the West African subregion. It thus adds the literature and points to the need for the adoption of multidisciplinary measures by the accounting profession and financial statements users with the view to eliminating or at the least minimising its persistence and escalation among the various relevant players.

Details

Accounting in Emerging Economies
Type: Book
ISBN: 978-1-84950-626-7

Article
Publication date: 6 November 2009

Zangina Isshaq, Godfred A. Bokpin and Joseph Mensah Onumah

The purpose of this paper is to examine the interaction between corporate governance, ownership structure, cash holdings, and firm value on the Ghana Stock Exchange.

5278

Abstract

Purpose

The 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/approach

A 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.

Findings

Board 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/value

This 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).

Details

The Journal of Risk Finance, vol. 10 no. 5
Type: Research Article
ISSN: 1526-5943

Keywords

1 – 10 of 16