Corporate governance and bank capital: Evidence from a cross-country analysis

This thesis was submitted for the degree of Master of Philosophy and awarded by Brunel University, 14/12/2010.The objective of this study is to provide empirical evidence on how owners of family managed firms affect bank leverage in family owned and managed firms. In addition, to assess the effect when a control right of the controlling owner exceeds cash flow rights which give rise to the agency problem in a bank with ownership concentration on bank leverage. Using cross-country bank-level data from Caprio et.al (2007) the study revealed that family- owner managed firms tend to have lower debt and this supports the hypothesis that bank leverage is likely to be lower in owner managed family firms. Furthermore, using equity ratio as an alternative indicator of bank leverage, the result indicates that family owner managed firms have a positively significant impact on bank leverage. This suggests that in a family- owner managed firm there is always a higher level of equity to finance the asset of banks in order to make sure the asset base of the bank is strong. This further strengthen the position of our result when using liability ratio in term of leverage where the inverse relationship between leverage and family-owner managed firms is interpreted as dependence on equity rather debt. Therefore, this implies that family owner managed firms prefer lower bank leverage. Moreover, higher control rights than cash flow rights give rise to a serious agency problem, as a result the control rights of the controlling owner exceeds cash flow rights has a significant positive relationship on bank leverage in term of liability ratio, and a significant negative relationship on bank leverage in term of equity ratio. This finding which uses the liability ratio in term of leverage further explained that bank leverage is higher when control rights of the controlling owner exceeds cash flow rights. The result also suggests that for firms where control rights of the controlling owners exceed cash flow rights, the equity is lower so they will prefer debt financing because of the fear of losing control. Situations like this are associated with an over- reliance on debt due to large shareholders being unwilling to dilute their ownership, generally this known as non-dilution of entrenchment. This implies that bank leverage is higher if control exceeds cash flow rights. However, this study recommends that there should be more dilution of ownership in family-owner managed firms so those minority owners are not exploited. In addition, controlling shareholder should not allow excessive building up of bank leverage because too much debt may lower bank valuation. Consequently, banks need to be better regulated furthermore excessive leverage has been identified as one of the reasons for the current financial crisis

The Key Challenges of the Corporate Governance of Firms: Empirical Evidence from Sub-Saharan African Anglophone (SSAA) Countries

Motivation.In the Sub-Saharan Africa countries there are several factors contributing to the collapse of firms. Most firms have failed due to poor corporate governance practices. The recent collapse of some firms in the financial and non-financial sectors in the Sub-region shows that there are challenges hindering effective corporate governance of firms in the Subregion. Consequently, this study uses empirical evidence to identify views about the important components of good corporate governance practice for listed firms: institutional characteristics; the board of directors; and the effects of external factors. Research question. The pertinent research question that this study addresses is the identification of the components that are essential for good corporate governance of firms in the Sub-region. This study tries to prioritise the components. Methodology. Data were collected by questionnaire administered to stakeholders of corporate governance of listed firms in Ghana, Nigeria and South Africa.Regression is used to estimate the relationship between institutional characteristic, responsibilities of the board of directors and external factors on corporate governance system. Main findings. 1. Enforcement, disclosure, transparency and regulatory frameworks may be necessary to improve corporate governance practice in all the countries in the Sub-region (SSAA). 2. There is evidence that commitment of board members to disclosure and communication may provide effective corporate governance practice. 3. Board duality (separation of role between chairman and CEO) is likely to hinder corporate governance practices. 4. We found that in all the countries in the Sub-region accounting system plays a major role to promote sound corporate governance practice. However, the political environment, societal and cultural factor, corruption, and economic factors such asmacro-economic policies may hinder corporate governance practices. Policy recommendations: This study recommends that corporate governance stakeholders should adopt a whistle blowing method and also that institutional bodies should be more prudent in monitoring of rules and laws with stringent penalties. In addition, there should be adequate information and disclosure on the rights and obligation of the shareholder of firms in the sub-region region. There is need to increase the number and role of independent directors,increase the use of advisory vote by shareholders on executive compensation and facilitation of shareholders activism. Furthermore, there is a need to have autonomous regulatory bodies and supervisory agencies free from any political/ government interference in the implementation of the Code and Guideline of corporate governance. The regulatory bodies and the supervisory agencies should be manned or be under the leadership ofpeople of goodwill, good character and trust. The Code or Guideline of corporate governance of Sub-Saharan Africa Anglophone countries should take cognisance of and be aligned with socio-cultural environment of the countries in the Sub-region

IMPACT OF INSTITUTIONAL CHARACTERISTICS OF CORPORATE GOVERNANCE ON CORPORATE GOVERNANCE SYSTEM IN SUB-SAHARAN AFRICA ANGLOPHONE COUNTRIES (SSAA).

This paper assesses the impact of institutional characteristics of corporate governance on corporate system of firms using survey questionnaire based on international corporate governance norms. Data were collected from listed firms in Ghana, Nigeria and South Africa. The conclusions are follows: (1) In Ghanaian and South African firms show that regulatory framework and enforcement of corporate governance have a positive significant impact on corporate governance system. However, in Nigerian firms’ regulatory framework has a negative significant relationship with corporate governance system. This result suggests that in Ghanaian and South African firms’ regulatory frameworks and enforcement may be stronger than that in Nigerian firms. (2) In Nigerian firms, there are violations of minority shareholders right. (3) Ownership concentration is significant with corporate governance system in the region. This indicates that ownership concentration is prevalent in firms of Sub-Saharan African Anglophone countries. We recommend that there should be prudent monitoring of corporate governance rules and enforcement

IMPACT OF THE NIGERIAN CAPITAL MARKET ON THE ECONOMY

There are elements upon which a nations’ economic development are dependent. The importance of Capital Market as one of the vehicles upon which most underdeveloped economies could grow cannot be overemphasized. The extent to which these economies experience the said growth is quite relative to the level of awareness and management of the market. Nigeria is not left out in the desire to maximize the gains of the capital market to boost its economy. This paper empirically examines the impact of the Nigerian Capital Market on the Nigerian economy looking at a 20 years period from 1992 to 2011. The Nigerian Capital Market was proxy as Market Capitalization against some variables of the economy such as Gross Domestic Product (GDP), Foreign Direct Investment, Inflation Rates, Total New Issues, Value of Transaction and Total Listing. Using the multiple regression analysis, we find that Capital Market has an insignificant impact on the Economy within the period under review. The study therefore advised that policies and measures that would boost investors’ confidence should be enshrined in the running of Nigerian Capital Market so that it could contribute significantly to the growth of Nigerian economy noting that all elements of the market are essential ingredients to the development of a nation

An Assessment Of The Competitors' Strategies Of Global System Mobile (GSM) Communication For Service Providers In Nigeria

This study examines the Competitors’ Strategies of the five GSM Service providers in Nigeria. Survey questionnaire was administered to the stakeholders in order to collect the data .The purpose of this study is to identify those strategies employed by each network against its competitors and how those strategies succeeded in bringing about the realization of corporate objective, promotion, customers satisfaction and target market. We find that various strategies adopted by the GSM providers provide a significant influence on the promotions, corporate objectives, Target markets and customers satisfaction. In addition we find that there is need for GSM providers to involve in marketing research in order to create their own original promotional strategies (or products) instead of imitating or mimicking strategies by other network. Furthermore, the study recommends that they should continue to lay more emphasizes on the strategies for promotions, customer services, corporate objectives and the target market so as to achieve the organizational goa