Ownership and Control in Corporate Organisations in Developing Countries: Evidence from a Transition Economy

This study examines how internal governance structures in corporate organisations function in ensuring good corporate governance. It contributes to the extant art of knowledge by shedding light on how ownership and board control structures in corporate organisations operate to achieving good corporate governance in developing countries. Using interviews, observations and archival records, catholic and significant data is collected from four large quoted corporate organisations on the Ghana Stock Exchange for the analysis of the study. By linking the data to the theoretical propositions, the study reveals that these four corporate organisations are characterised by the presence of large shareholders and as a result, they tend to wield extensive control over the activities of the companies through their involvement in the decision-making processes. This sort of involvement by large shareholders in the decision-making processes of the companies is as a result of the incessant flow of information from the companies’ management to them. However, whilst the presence of large shareholders has the tendency to solving the principal-agent problem, it poses challenges in regards to minority shareholders’ interests in these corporate organisations. Small equity holders of the companies only rely on the minimum statutory disclosures in the annual reports of the companies and are always relegated to the background in times of information sharing. The study also highlights that boards of directors tend to exercise control over corporate organisations when majority shareholders stop interfering in their dealings. This implies that when major shareholders fully partake in corporate decision-making processes of companies, boards of directors seem to be sheer advisory bodies to management. Keywords: Ownership control, Board control, Board of directors, Ownership structure, Corporate Governance, Ghana

Prospects and Challenges of Corporate Governance in Ghana

The relevance of corporate governance principles in the management of corporate organisations cannot be underestimated. The increasing influence of principles of corporate governance across the globe has been greatly linked to the recent corporate frauds and scandals. These frauds and scandals largely resulted from the failure of authorities of countries to effectively implement the legal and regulatory frameworks pertaining to corporate governance. Ghana is archetypal in regards to the failure of authorities to enforce the laws and regulations in relation to corporate governance. During the enforcement of the laws and regulations of corporate governance, some vitally important issues are either overlooked or deliberately deserted. This paper attempts to examine the legal and regulatory framework of Ghana in regards to corporate governance and points out the importance of complying with good corporate governance. It also highlights prevailing issues of corporate governance practice in Ghana. It finally makes some recommendations, which are considered the major contribution of this paper

Does country-level governance enhance ethical behaviour of firms? An African perspective

This paper examines the relationship between country-level governance and ethical behaviour of firms in African countries spanning, 2009-2012. It employs a broad set of country-level governance ratings by the World Bank and data on ethical behaviour of firms by the World Economic Forum’s report on Global Competitiveness. Full data of a total of 39 African economies out of the 54 (including two disputed) economies over the sample period was obtained for our analysis. We find a statistically significant and positive relationship between country-level rule of law, regulatory quality, control of corruption and democracy, and firm ethical behaviour of firms in African economies. This implies that improvement in country-level rule of law, regulatory quality, control of corruption and democracy tends to be associated with sound ethical behaviour of firms in African economies. However, we did not find any statistically significant relationship between country-level accountability, political stability, outsider model of governance, and ethical behaviour of firms.As a continent that is yet to fully discover its potential, the practice of good governance is particularly germane as this may not only help ensure sound ethical standards of corporations, but may also aid the continent to attract foreign investors, which will beneficially impact on economic growth and development of African economies. In this respect, efforts by governments across the continent to ensuring good governance are laudable. One possible way is to ensure an effective and transparent enforcement of laws to stimulate compliance in a specifically clear-cut manner- by crafting costs for non-compliance (for instance, legal costs, investigations cost, imprisonment, dent to image and fines).This paper reinforces the belief that the existence of country-level good governance could provide and enhance cohesive and internally consistent ethical standards of companies

Institutional structures and financial market development in Africa

Our paper examines the relationship between institutional structures and the level of financial markets development in Africa. Our paper contributes to the extant literature by using other financial market development variables-ease of access to loans and venture capital availability-that have not before been used to analyzed how institutional structures influence the level of financial markets development in the context of Africa. We employ a two-step generalized method of moment estimator with corrected standard errors to examine this. We demonstrate that a high-quality institutional environment is relevant in explaining ease of access to loans and venture capital availability in Africa. Based on these results, our paper argues that good institutional structures could help stimulate the level of financial markets development in Africa. However, to attain this feat, African governments need to strengthen institutions through effective enforcement of laws to foster compliance in a specifically definite manner-by fashioning out costs for non-complianc

IFRS compliance, corporate governance and financial reporting quality of GSE-listed non-financial firms

The adoption of International financial reporting standards (IFRS) has been presented in several empirical literature as a factor that could improve the quality of financial reports. However, Ghana has not attained the desired levels of financial reporting quality after the adoption of IFRS. Literature reveals that lack of proper enforcement of these high-quality standards may result in limited compliance and will undermine the effectiveness of these standards in terms of attaining high-quality financial reports. This study therefore argues that the relationship between IFRS compliance and reporting quality revolves around some enforcement mechanisms like corporate governance structures. In view of that, by using random effect estimation technique, this study examined the role of corporate governance in the relationship between IFRS compliance and the reporting quality of firms listed on the Ghana Stock Exchange (GSE). The study found that the right corporate governance mechanisms will enhance the positive effect of IFRS compliance on reporting quality. This study further recommends that to gain an appreciable level of public confidence in the annual reports of firms listed on the GSE, the audit committee's independence and the board's independence should be strengthened to ensure that management does not only adopt IFRS, but that the standards are actually complied with