Board efficiency, Professional management, Ethics, and Financial Performance of firms in sub-Sahara Africa: Does Size Matter?
Keywords:
Board efficiency, Professional Management, Ethics, Sales, ProfitabilityAbstract
The study examines the impact of board efficiency, professional management, and ethics on the financial performance of firms in SSA after considering the sizes of these firms. Firm and country-level data for non-finance firms in SSA are obtained from the Bloomberg Terminal from 2007 to 2017. The OLS, Fixed, Random Models, and the difference GMM techniques are used for the analysis. The study results reveal that board efficiency is negatively related to the profits of firms in SSA which is proxied by the ROAs of the firms, but it positively impacts Sales. Professional management also has a positive relationship with profits and negatively relates to Sales, while Ethics also has a negative relationship with Sales, The study further finds that, by considering the sizes of the firms, board efficiency positively affects sales levels of firms in SSA, professional management has a positive impact on the firms' profits while ethics also affect profits of the firms positively. Therefore, this study provides significant implications for firms and gives firms’ management a framework for adoption in managing their business activities.
References
Ahasak, S., Albrecht, S. L., De Sanctis M. & Barnett, N. S. (2018). Boards of Directors: Assessing their Functioning and Validation of a Multi-Dimensional Measure. Frontiers in Psychology, 9, 2425.
Ahmad, M. & Guohui, W., Hasan, M. & Rafiq, Y. & Rehman, R. (2021). Financial Leverage Hits Corporate Performance. 10.1007/978-3-319-48454-9_10.
Ahmad, I. & Ahmad, S. B. (2020). Effect of Managerial Skills on the Performance of Small- and Medium-Sized Enterprises: A Case Study in Pakistan. Journal of Asian Finance, Economics and Business, 8(4), 0161–0170.
Amenu-Tekaa, K. S. (2022). Financial Sector Regulatory and Supervisory Framework in Ghana- The Pre and Post 2017 Banking Crisis. International Journal of Economics, Commerce and Management, 10(1), 1-29.
Ali, W., Ansari, R. H. & Memon, M. A. B. (2020). Corporate Governance and Firm Financial Performance: A Meta-Analysis Study. Journal of Accounting and Finance in Emerging Economies, 6(4), 917-940.
Alkurdi, A. Harmad, A. Thneibat, H. & Elmarzouky, M. (2021). Ownership structure’s effect on financial performance: An empirical analysis of Jordanian listed firms. Cogent Business & Management, 8, 1, 1939930.
Batchimeg B. Financial performance determinants of organizations: The case of Mongolian companies. Journal of Competitiveness, 9(3), 22-33.
Beekman AV, Robinson RB. Supplier partnership and the small, high-growth firm: Selecting for success. Journal of Small Business Management, 42(1):59-77.
Beck T, Demirgüç-Kunt A, Maksimovic V. (2005). Financial and legal constraints to growth: does firm size matter? The Journal of Finance. 50(1), 137-177.
Bhagat, S. & Bolton, B. (2013). Director Ownership, Governance, and Performance. Journal of Financial & Quantitative Analysis, 48(1),105-135.
Bhutta, A. I. Sheikh, M. F., Munir, A., Naz, A. & Saif, I. (2021). Managerial ability and firm performance: Evidence from an emerging market. Cogent Business & Management, 8(1), 1-22.
Black, B., Jang, H. & Kim, W. (2012). Does Corporate Governance Predict Firms' Market Values? Evidence from Korea. Journal of Law, Economics & Organization, 22, 366-413.
Bonface, A., Malenya, A. A. & Musiega, D. (2015). Effect of Managerial Expertise on Organizational Performance of Investment Banks in Kenya: A case Study of Old Mutual Acquisition of Faulu Kenya Micro-Enterprise. International Journal of Business and Management Invention, 4(4), 38-54.
Cadbury, A. (2002). Corporate governance and chairmanship: A personal view. Oxford University Press on Demand.
Cadbury, A. (1992). Report of the Committee on the Financial Aspects of Corporate Governance. Gee & Co Publishing, London.
Cera, E. & Kusaku, A. (2020). Factors Influencing Organizational Performance: Work Environment, Training-Development, Management and Organizational Culture. European Journal of Economics and Business Studies, 6(1), 216-27.
Chen, H. (2020). The Impact of Financial Leverage on Firm Performance – Based on the Moderating Role of Operating Leverage. Advances in Economics, Business and Management Research, 159.
Chuah, S. F. & Hooy, C-W. (2018) ‘The impact of board ethnic diversity on firm performance: evidence from public listed firms in Malaysia’. International Journal of Monetary Economics and Finance, 11(3), 260–270.
Dang, C. Li, Z. F. & Yang, C. (2018). Measuring Firm Size in Empirical Corporate Finance. Journal of Banking & Finance, 8,159-176.
Davis, J. W. (2012). A Critical View of Global Governance. Swiss Political Science Review, 18(2), 272–286.
Din, S. U., Khan, M. A., Khan, M. J. & Khan, M. Y. (2021). Ownership structure and corporate financial performance in an emerging market: a dynamic panel data analysis. International Journal of Emerging Markets, 1746-8809.
Echekoba, F. N, Ananwude, A. C. The relationship between corporate performance and financial structure: An empirical study of construction and real estate firms in Nigeria. British Journal of Economics, Management & Trade, 2016; 12(4):1-17.
Enzeanyim, E. E. & Ezeanolue, E. T. (2021). Business Ethics and Organizational Performance in Manufacturing Firms in South-East, Nigeria. International. Journal of Business & Law Research, 9(3), 1-14.
Eshun, R. (2020). The Effect of Corporate Governance and Financing Decisions on Ghanaian Listed Companies. Maters Thesis, University of Ghana.
Gan, H. (2018). Does CEO managerial ability matter? Evidence from corporate investment efficiency. Review Quantitative Finance Accounting.
Jarbou, L. S., Abu-Serdaneh, J. & Mahd, O. A. L. (2018). Ownership Structure Impact on Jordanian Banks’ Financial Performance. Asian Journal of Accounting and Governance, 9, 1–9.
Jensen, M. C. & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure. Journal of Financial Economics, 3, 305 - 350.
Kao, F. Hodgkinson, L. & Jaafar, A. (2019). Ownership structure, board of directors and firm performance: evidence from Taiwan. Corporate Governance, 19(1), 189-216.
Karanja, J. W. (2014). Effects of Corporate Culture on Organization Performance. Journal of Mathematics, 10(6), 59-65
Khan T, Shamim M, Goyal J. (2018). Panel data analysis of profitability determinants: Evidence from Indian telecom companies. Theoretical Economics Letters, 8:3581-3593.
Ku, Y. & Yen, T. (2016). Heterogenous Effect of Financial Leverage on Corporate Performance: A Quantile Regression Analysis of Taiwanese Companies. Review of Pacific Basin Financial Markets and Policies, 19(3), 1-33.
Li H. & Chen, P. (2018). Board gender diversity and firm performance: The moderating role of firm size. Business Ethics: A European Review, 27:294–308.
Kuo, K. & Lu, W. & Dinh, T. N. (2019). Firm performance and ownership structure: Dynamic network data envelopment analysis approach. Management Decision Economics, 608-623.
Iqbal, U. & Usman, M. (2018). Impact of Financial Leverage on Firm Performance. Seisense Journal of Management, 1(2).
Madhani, P. M. (2007). Corporate Governance: A Journey from Compliance to Competitive Advantage. Enhancing Enterprise Competitiveness (Strategy, Operations and Finance), (2 Eds.), 19 -33.
McNeil, M. & Malena, C. (2010). Demanding Good Governance: Lessons from Social Accountability Initiatives in Africa. https://openknowledge.worldbank.org/handle/10986/2478. retrieved 12-07-2022.
Mehralian, G., Peikanpou, M., Rangchian, M. & Aghakhani, H. (2020). Managerial skills and performance in small businesses: the mediating role of organizational climate. Journal of Asia Business Studies, 14(3), 361-377.
Mgaya, R. L. (2016). The Influence of Workplace Ethics on Organization Performance: A Case of Seven Nonprofit Organizations in Arusha City in Tanzania. Mount Meru University.
OECD (2004). Principles of Corporate Governance, Paris France, OECD.
Rahman, M. & Saima, F. N. (2018). Efficiency of Board Composition on Firm Performance: Empirical Evidence from listed Manufacturing Firms of Bangladesh. Journal of Asian Finance, Economics and Business, 5(2), 53-61.
Sumlin, C. Hough, C. & Green, K. (2021). The Impact of Ethics Environment, Organizational Commitment, and Job Satisfaction on Organizational Performance. Journal of Business and Management, 27(1), 53-78.
Zaingales, L. (2017). Towards a Political Theory of the Firm. Journal of Economic Perspectives. 31(3), 113-130.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Emmanuel Okofo-Dartey
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
