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Article
Publication date: 3 December 2018

William Coffie, Ibrahim Bedi and Mohammed Amidu

This paper aims to investigate the effects of audit quality on the cost of capital in Ghana.

Abstract

Purpose

This paper aims to investigate the effects of audit quality on the cost of capital in Ghana.

Design/methodology/approach

Non-financial firms listed on the Ghana Stock Exchange (GSE) as well as non-listed firms from the database of Ghana Club 100 were included in the sample. Series are yearly, covering a sample of 40 firms during the six-year period, 2008-2013. The study employed the positivist research paradigm to establish the relationship between audit quality and the cost of capital.

Findings

There is evidence to suggest that the cost of debt and the overall cost of capital of firms in Ghana can be explained by the quality of the external auditors. The results also show that the large size of the board is associated with low cost of debt.

Research limitations/implications

The fact that the choice of quality measure is based on firm size only and other measurements of audit quality could not be measured. Future research may examine how other approaches to measuring audit quality affect cost of capital.

Practical implications

The results significant for those charged with assurance and regulation, as well as lenders and managers of companies.

Originality/value

The authors investigate how external auditing quality affects the cost of capital of firms operating in Ghana.

Details

Journal of Financial Reporting and Accounting, vol. 16 no. 4
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 5 February 2018

William Coffie, Francis Aboagye-Otchere and Alhassan Musah

The purpose of this paper is to examine the effect of corporate governance and degree of multinational activities (DMAs) on corporate social responsibility disclosures…

Abstract

Purpose

The purpose of this paper is to examine the effect of corporate governance and degree of multinational activities (DMAs) on corporate social responsibility disclosures (CSRD) within the context of a developing country.

Design/methodology/approach

Using the annual report of 33 listed firms spanning from 2008 to 2013, the authors employed content analysis based on an adapted index score of CSRD developed by Hackston and Milne (1996) as applied in similar studies (e.g. Deegan et al., 2002; Hassan, 2014). Guided by the authors’ hypotheses, the authors model quantity and quality of CSRD (two separate econometric models) as functions of multinational activity and corporate governance.

Findings

The results show that the DMA has a positive association with both quality and quality of CSRD. The results also show that certain corporate governance characteristics such as board size (quality and quantity) as well as the presence of a social responsibility sub-committee of the board (quality) have a positive relationship with CSRD. However, increasing the number of non-executive directors (NEDs) may not necessarily improve the quantity or quality of disclosure.

Research limitations/implications

The study is limited by theory and geography. Theoretically, the study is based on the legitimacy theory and feels compelled to reiterate the importance of considering alternative theoretical perspective in future research. Again the study is limited geographically as the investigation is based on Ghana only and the authors suggest that future research be extended to other countries.

Practical implications

This study is important as it demonstrates the importance of providing quality of CSRD to stakeholders when the board of a firm has a sub-committee responsible for corporate social responsibility.

Originality/value

The results of the study extend the literature on CSRD by demonstrating a new evidence on how the degree of firm’s multinational activities together with corporate government mechanism affects both quantity and quality of CSRD in the context of unchartered developing country. The results support the theoretical view that companies engage in CSRD in attempt to legitimize their operations based on the pressure exerted on them and the mechanism put in place to respond to those pressures.

Details

Journal of Accounting in Emerging Economies, vol. 8 no. 1
Type: Research Article
ISSN: 2042-1168

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Article
Publication date: 7 January 2019

Mohammed Amidu, William Coffie and Philomina Acquah

This paper aims to investigate how transfer pricing (TP) and earnings management affect tax avoidance of firms in Ghana.

Abstract

Purpose

This paper aims to investigate how transfer pricing (TP) and earnings management affect tax avoidance of firms in Ghana.

Design/methodology/approach

The authors use a panel data set from 2008 to 2015 to further shed light on transfer pricing-tax avoidance nexus by examining the complex interaction of three key variables: transfer pricing, earnings management and tax avoidance.

Findings

The results show that almost all the sample firms have engaged in some form of transfer pricing strategies and the manipulation of earnings to avoid tax during 2008-2015. There is evidence to suggest that non-financial multinational corporations manipulate more earnings than the financial firms while financial firms also use more TP than non-financial firms. The overall results suggest that the sensitivity of tax avoidance to transfer pricing decreases as firms increase their earnings management. By extension, these results have important policy implication for policymakers in assessing the effectiveness of tax laws relating to transfer pricing.

Originality/value

The authors investigate how transfer pricing and earnings management affect the avoidance of firms operating in Ghana.

Details

Journal of Financial Crime, vol. 26 no. 1
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 27 September 2019

William Coffie and Ibrahim Bedi

This study aims to investigate the effects of international financial reporting standards (IFRS) adoption and firm size on auditors’ fees determination in the Ghanaian…

Abstract

Purpose

This study aims to investigate the effects of international financial reporting standards (IFRS) adoption and firm size on auditors’ fees determination in the Ghanaian financial industry.

Design/methodology/approach

The authors use the annual report of 52 listed and non-listed firms spanning from 2003 to 2014. Guided by the hypotheses, the authors conditioned audit fees on IFRS adoption and firm size and execute robust fixed effects panel regression.

Findings

The results show that IFRS adoption has a positive coefficient with audit fees suggesting that the adoption of IFRS, indeed, increases the audit fees paid by banks and insurance firms, as well as the industry as a whole. The results are consistent with the idea that IFRS adoption increases auditor efforts with respect to time and complex nature of some aspect of the standards. Again, as expected, the coefficient of size is positively and significantly related to audit fees. This indicates that the size of the auditee plays a vital role in determining audit fees.

Research limitations/implications

The study is limited by industry (i.e. the financial services industry) and geography (i.e. Ghana). The authors propose further research that will widely consider other sectors and countries to improve the current scanty literature in this area. Besides, theoretically, the study is limited to the lending credibility theory and feels compelled to reiterate the importance of considering alternative theoretical perspective(s) in future research.

Practical implications

This study is significant to practitioners as it demonstrates the importance of the determinants of the auditors’ fees. It helps auditors to apply the relevant charging formula when determining audit fees, while it helps managers to improve upon the quality of reporting to control audit bill and forecasting their audit expenditure.

Originality/value

The results of the study extend the literature on the cost side of IFRS adoption by investigating the financial services industry and non-listed firms in a new context, i.e. a developing country where this research is uncharted. The existing studies based their analysis on either cross-section or pooled analysis and shorter post-adoption period (Cameran and Perotti, 2014). However, using an extended post-adoption period data, the authors base the study on analytical panel model, which directly examine the cost side of IFRS adoption with size as joint key explanatory variables with emphasis on financial institutions and external auditors.

Details

Accounting Research Journal, vol. 32 no. 3
Type: Research Article
ISSN: 1030-9616

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Article
Publication date: 30 September 2019

Lord Mensah, Divine Allotey, Emmanuel Sarpong-Kumankoma and William Coffie

This paper aims to test whether a debt threshold of public debt has any effect on economic growth in Africa.

Abstract

Purpose

This paper aims to test whether a debt threshold of public debt has any effect on economic growth in Africa.

Design/methodology/approach

The authors applied the panel autoregressive distributed models on 38 African countries with annual data from 1970 to 2015. It was established that the threshold and the trajectory of debt has an impact on economic growth.

Findings

Specifically, the authors found that public debt hampers economic growth when the depth is in the region of 20 to 80 per cent of GDP. Based on debt trajectory, this study established that increasing public debt beyond 50 to 80 per cent of GDP adversely affects economic growth in Africa. The study also finds that the persistent rise in debt also has adverse effect on economic growth in the African countries in the sample. It must be known to policymakers that the threshold of debt in developing countries, and for that matter African countries, are less than that of developed countries.

Practical implications

This study suggests threshold effects between 20 and 50 per cent; this should be a guide for policymakers in the accumulation of debt stock. Interestingly, the findings suggest some debt trajectory effect, which policymakers might consider by increasing efforts to reduce debt levels when they fall between 50 to 80 per cent of GDP. This implies that reducing such debt levels can help African countries increase their economic growth.

Originality/value

The study is unique because it seeks to add new evidence on the relationship between public debt and growth in the African region, by considering the impact of the persistent growth of public debt on economic growth.

Details

International Journal of Development Issues, vol. 19 no. 1
Type: Research Article
ISSN: 1446-8956

Keywords

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Book part
Publication date: 4 December 2012

William Coffie and Osita Chukwulobelu

Purpose – The purpose of this chapter is to examine whether or not the Capital Asset Pricing Model (CAPM) reasonably describes the return generating process on the…

Abstract

Purpose – The purpose of this chapter is to examine whether or not the Capital Asset Pricing Model (CAPM) reasonably describes the return generating process on the Ghanaian Stock Exchange using monthly return data of 19 individual companies listed on the Exchange during the period January 2000 to December 2009.

Methodology/approach – We follow a methodology similar to Jensen (1968) time series approach. Parameters are estimated using OLS. This study is designed to measure beta risk across different times by following the time series approach. The betas of the individual securities are estimated using time series data of the excess return version of the CAPM.

Findings – Our test results show that although market beta contributes to the variation in equity returns in Ghana, its contribution is not as significant as predicted by the CAPM, and in some cases very weak. Our results also reject the strictest form of the Sharpe–Lintner CAPM, but we found positive linear relationship between equity risk premium and market beta. Instead, our evidence uphold the Jensen (1968) and Jensen, Black, and Scholes (1972) versions of the CAPM.

Research limitations/implications – This study is limited to the single-factor CAPM. Future studies will extend the test to include both size and BE/ME fundamentals and factors relating to P/E ratio, momentum and liquidity.

Practical implications – Our results will make corporate managers to be cautious when using CAPM as a basis to determine cost of equity for investment appraisal purposes, and fund managers when evaluating asset and portfolio performance.

Originality/value – The CAPM is applied to individual securities instead of portfolios, since the model was developed using information on a single security.

Details

Finance and Development in Africa
Type: Book
ISBN: 978-1-78190-225-7

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Book part
Publication date: 4 December 2012

Abstract

Details

Finance and Development in Africa
Type: Book
ISBN: 978-1-78190-225-7

To view the access options for this content please click here
Book part
Publication date: 4 December 2012

Abstract

Details

Finance and Development in Africa
Type: Book
ISBN: 978-1-78190-225-7

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Article
Publication date: 23 May 2020

Kofi Bondzie Afful and William Opoku

Sub-Saharan African (SSA) stock exchanges are imperfect and inefficient. Therefore, orthodox finance theories are unable to completely explain their market returns. Such…

Abstract

Purpose

Sub-Saharan African (SSA) stock exchanges are imperfect and inefficient. Therefore, orthodox finance theories are unable to completely explain their market returns. Such models mainly identify anomalies when applied to the sub-region. Consequently, this paper develops an original theoretical model to better explain market returns on the sub-continent.

Design/methodology/approach

This paper develops an alternate analytical framework that combines adaptive expectations, Keynesian LM model and modified uncovered interest parity (UIP) formulations to address empirical anomalies identified by previous literature when analyzing SSA's inefficient stock markets. Using panel data, the study first computes the fixed as well as random effects regressions and, later, a Generalized Method of Moments (GMM) dynamic panel regression for further empirical analysis.

Findings

Both the fixed and random effects regression results indicate that the relative output-money supply disparity and foreign inflation-money supply growth rate spread have positive effects on market returns in SSA. On the other hand, foreign interest rates have an inverse effect. Although the GMM dynamic panel regression has similar results, it additionally finds that market returns in SSA are autoregressive. This suggests that past returns are persistent.

Research limitations/implications

A key implication is that multipliers and transmission mechanisms in SSA may take longer to adjust, thereby limiting short-run market returns. Also, policymakers must encourage a critical mass of firms to list in order to enhance efficiency. Additionally, policy variables significantly influence returns. One limitation is the high market segmentation in SSA. This heightens heterogeneity, emphasizing fixed effects.

Practical implications

Also, the findings of this study may not apply to all emerging economies as SSA economies are highly heterogeneous.

Social implications

The segmented nature of SSA stock markets may have implications for income inequality and the distribution of resources within the economy. Also, it indicates that there are limits to how firms use capital markets on the sub-continent.

Originality/value

This paper abstracts from the strict ideal market conditions prescribed by modern finance theories and develops an original modified UIP model. It finds that SSA stock markets may be more sensitive to policy variables, instead of determinants postulated by orthodox finance concepts. The study offers opportunities for further critical examination of returns in imperfect frontier markets.

Details

International Journal of Emerging Markets, vol. 16 no. 4
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 14 October 2013

Panagiotis Mpogiatzidis

The aim of this paper is to investigate the prescribing behavior and applied practices of doctors who are the heads of clinical departments in the National Health System…

Abstract

Purpose

The aim of this paper is to investigate the prescribing behavior and applied practices of doctors who are the heads of clinical departments in the National Health System in Greece. Moreover, this paper aims to evaluate a set of factors influencing them in this conduct through both their scientific and managerial status.

Design/methodology/approach

The sample consisted of 123 clinical department-heads in 15 hospitals and a questionnaire specifically designed for the purposes of this research effort was used. Prescribing criteria were divided into three categories: scientific, functional and behavioral. Demographic data were also included. The data were processed using SPSS17 statistical package. Multivariate Analysis of Variance (MANOVA) of the mean of the parameters identified was applied.

Findings

The survey assessed, revealed and evaluated the most important factors affecting the selection process of selecting pharmaceuticals on a department head level. Existing gaps in scientific information and rational management of procedure implementation were detected. Different perceptions of doctors-department heads towards prescribing criteria emanating from their previous experience on decision-making positions, age and hospital spatial characteristics (urban-provincial) were also highlighted.

Originality/value

The results of this survey provide both researchers and health policy makers with a better insight of the factors influencing prescribing behavior, and decision-making processes of doctors-department heads in the context of a Public Health Care System.

Details

Clinical Governance: An International Journal, vol. 18 no. 4
Type: Research Article
ISSN: 1477-7274

Keywords

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