Browsing by Author "Danso, Albert"

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    Bank business models, failure risk and earnings opacity: A short- versus long-term perspective
    (Elsevier, 2022-01-12) Lartey, Theophilus; James, Gregory A.; Danso, Albert; Boateng, Agyenim
    Despite the ongoing bank regulatory reforms, relatively little research attention has been given to the effects of bank business models and opacity of bank balance sheet structure which may hinder regulation and market discipline. In this study, we explore the effects of business model strategies on banks’ earnings opacity in the UK banking sector. Distinguishing between the short-term (within) and long-term (between) effects, our findings suggest that retail-oriented business models reduce the likelihood of earnings management practices in the short term but not over the long term. In contrast, wholesale-oriented business models increase the probability of earnings manipulation both in the short and long term. While bank business models characterised by a greater degree of functional diversification tend to lower earnings manipulation in the short term, the long-term incentives cannot be mitigated. Our findings also demonstrate that low failure risk (or greater solvency) represents an important channel in mitigating the effects of business models on earnings management practices both in the short and long term. Our results are robust to alternative
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    Capital structure revisited. Do crisis and competition matter in a Keiretsu corporate structure?
    (Wiley, 2020-07-09) Danso, Albert; Fosu, Samuel; Owusu-Agyei, Samuel; Ntim, Collins G.; Adegbite, Emmanuel
    We investigate firm-level determinants of capital structure using a large sample of 4,284 Japanese firms over a nineteen-year period (i.e., over 61,000 firm-year observations), a hitherto less examined sample for this purpose. We conduct our analysis and interpret our findings predominantly within the pecking order, the trade-off and the agency theoretical frameworks. We uncover three new findings. First, our evidence indicates that insights derived from the extant literature on capital structure are cross-national and are applicable in the context of Japan, despite the unique characteristics of Japanese firms. Second, financial crisis significantly impacts the relationship between leverage and firm-level determinants, particularly accentuating the effect of asset tangibility and growth. Third, product market competition significantly impacts the observed relationship between firm-level determinants and leverage. Our results are robust, controlling for the joint effects of competition and crisis.
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    CEO extraversion and capital structure decisions: the role of firm dynamics, product market competition, and financial crisis
    (Wiley, 2020) Lartey, Theophilus; Kesse, Kwabena; Danso, Albert
    Using panel data of U.S. firms, we focus on an important yet understudied facet of the chief executive officer’s (CEO) personality—extraversion—and how it affects corporate capital structure decisions. We examine how this relation is moderated by financing (tax) benefits, financial crisis, firm size, growth opportunities, and collateralization. The results show that firms managed by extraverted CEOs use greater financial leverage, adjusting toward target leverage levels at a faster speed, with about half-life within a year for book and market leverage. In addition, the positive extraversion–leverage relation is enhanced for firms that are large, have greater collateralizable assets, and are more vulnerable to external shocks (financial crisis). Last, although the positive extraversion–leverage relation holds particularly when product market competition is high, the effect is attenuated for high-growth opportunity firms.
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    CEO overconfidence and debt covenant violations
    (Wiley, 2022-02-04) Lartey, Theophilus; Danso, Albert
    We examine how the level of chief executive officer (CEO) overconfidence might affect a borrowing firm's ex ante covenant intensity and ex post covenant violations. We find that overconfident CEOs are less effective in steering the firm away from unfavorable opportunistic behavior, and hence creditors include more stringent covenant restrictions in the loan contracts of their firms. The interpretational bias and other positive illusions of overconfident CEOs coupled with the more stringent and/or greater number of stringent ex ante covenants lead to a greater likelihood of covenant violation. These results remain robust after accounting for potential endogeneity issues through various techniques. Ex post tests reveal that firms with more confident CEOs are more likely to violate loan covenants after controlling for covenant intensity. We also find that overconfident CEOs can mitigate the incidence of covenant violations, but only among loans to lower rated (non-investment-grade) borrowers and revolving lines of credit where benefits of effective monitoring are most pronounced.
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    CEO Overconfidence and IRS Attention
    (Elsevier, 2022-06-17) Lartey, Theophilus; Uddin, Moshfique; Danso, Albert; Geoffrey, Wood
    We examine the likelihood that the US Internal Revenue Service (IRS), in its enforcement role, will accord particular attention to firms that are managed by CEOs who exhibit over-confidence, given that such CEOs may be more aggressive in their tax policies and strategies. Using data from 7,757 firms, we find that this is indeed the case. Such attention is even more pronounced in the instance of overconfident CEOs whose firms are financially constrained and/or financially distressed. We also find that the IRS has augmented its audit processes to give more attention to overconfident CEOs during and post financial crisis. This may be due to the increased vulnerability of their firms to external shocks, which consequently increases the incentives to embark on tax avoidance strategies, value-destroying investments, and/or highly biased financial reporting (and forecasting responses) to tax authorities. Our results are robust after accounting for the possibility of endogeneity and using a wide range of specifications, measures, and econometric models.
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    CEO reputation, quality management and environmental innovation: the roles of stakeholder pressure and resource commitment
    (Wiley, 2020-04-13) Konadu, Renata; Owusu-Agyei, Samuel; Lartey, Theophilus; Danso, Albert; Adomako, Samuel; Amankwah-Amoah, Joseph
    In this paper, we examine how and when chief executive offers’ (CEOs’) reputation enhances environmental innovation by considering quality management as a mediating mechanism of this relationship. In addition, we introduce stakeholder pressures (primary and secondary stakeholder pressures) as important contingencies of the relationship between CEOs’ reputation and quality management. Moreover, we test the moderating role of resource commitment on the quality management-environmental innovation relationship. We test our research model using data from a manufacturing industry sample of 217 firms from Ghana. We find that quality management mediates the relationship between reputation and environmental innovation. Moreover, the relationship between CEOs’ reputation and quality management is amplified when levels of both primary and secondary stakeholder pressures are greater. Finally, our findings show that the effect of quality management on environmental innovation is enhanced when resource commitment is greater. Implications for theory and practice are discussed.
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    CEOs' market sentiment and corporate innovation: the role of financial uncertainty, competition and capital intensity
    (Elsevier, 2020-09-14) Lartey, Theophilus; Danso, Albert; Owusu-Agyei, Samuel
    Using panel data of 4,225 firms headquartered in the US, we examine the effects of CEOs’ market sentiment on corporate innovation capacity. We also examine the extent to which sentiment-innovation relation is moderated by: (i) financial uncertainty/vulnerability; (ii) competition; (iii) firm size and growth prospects; (iv) capital intensity; and (v) operational complexity. The results indicate that, both across and within firms, innovation declines when CEOs perceive market conditions to be good (high sentiment periods). In addition, the negative sentiment-innovation relation observed during high sentiment periods is enhanced when firms are large, and have high growth prospects and greater operational complexities. Nevertheless, firm innovation increases significantly during high sentiment periods when firms anticipate uncertainties about future cash flows, when competition is intense, and when capital intensity creates extreme entry barriers. Our core explanations hold even after accounting for endogeneity and using alternative measures of firm innovation.
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    Charity can still begin at home: Examining the drivers and boundary conditions of Africa-to-Africa outward foreign direct investment (OFDI)
    (Elsevier, 2023-12-12) Owusu-Yirenkyi, Diana; Akolgo, Portia M.; Naab, Gilbert Zana; Donbesuur, Francis; Danso, Albert
    Recent studies on ‘Africa Rising’ and ‘Africa-to-Africa Internationalization’ have propelled conversations on how African Small and Medium-Sized Enterprises (SMEs) can continue to internationalize within African countries. From the tenets of the institutional theory and the dynamic capabilities perspectives, this study proposes and tests a framework of how and when dysfunctional competition drives SMEs' outward foreign direct investments within African countries. Analysis of a survey data from 196 Ghanaian SMEs operating across the African continent indicates that cross-border open innovation mediates the relationship between dysfunctional competition and SMEs' intra- Africa OFDI activities. Further analysis revealed that SMEs' strategic agility plays a double-edged sword moderating role in enhancing the effects of dysfunctional competitions and cross-border open innovation on intra-Africa OFDI. These findings have significant implications for the international business and finance literature as well as the management and growth of African SMEs.
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    Chief executive officers' sustainability orientation and firm environmental performance: Networking and resource contingencies
    (Wiley, 2021-02-12) Adomako, Samuel; Amankwah-Amoah, Joseph; Danso, Albert; Obeng-Dankwah, George
    Although the existing literature supports the relationship between CEO sustainability orientation (SO) and entrepreneurial behaviour, empirical studies exploring how SO drives firm environmental performance (FEP) are lacking. In addition, the potential moderating effects of firm-level factors on this relationship are less understood. We contribute to filling this gap by examining the moderating effects of political connections and financial slack on the relationship between SO and FEP. Using data obtained from 297 small and medium-sized enterprises (SMEs) in Ghana, our results reveal that SO is positively related to FEP. In addition, our results show that the effect of SO on FEP is negative when firms have stronger financial slack and when firms are highly politically connected.
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    Co-opted boards and capital structure dynamics
    (Elsevier, 2021-06-25) Lartey, Theophilus; Danso, Albert; Agyenim, Boateng
    This study examines the effects of co-opted directors and further tests the monitoring effectiveness of non-co-opted independent directors and co-opted independent directors on capital structure decisions. Employing a large sample of 2,548 US firms over the 1996-2015 period, we find strong evidence that co-opted boards exert a positive and significant influence on firms’ financial leverage. We also find that, whereas co-opted independent directors are positively associated with financial leverage, non-co-opted independent directors have a negative influence on a firm’s leverage ratio, suggesting that co-option weakens the effective monitoring, thereby increasing the firm’s leverage ratio. Further analysis indicates that co-opted boards adjust towards target leverage levels at a faster speed, with a half-life within a year for book and market leverage. Lastly, our results show that the agency costs of managerial discretion and stockholder-bondholder conflicts arising from board co-option are important drivers of financial leverage relative to tax incentives. Our results are robust to alternative measures of board co-option, financial leverage, and endogeneity concerns.
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    Connectedness among diverse financial assets: Evidence from cryptocurrency uncertainty indices
    (Elsevier, 2024-11-18) Batra, S.; Tiwari, A. K.; Yadav,  M.; Danso, Albert
    This study examines the impact of cryptocurrency uncertainty indices on green bonds, currency, and commodity markets by using weekly data from January 1, 2014, to December 30, 2022. The study analyzes such relationships employing the time-varying robust Granger-Causality test coupled with the TVP-VAR-DY approach. The empirical findings unfold the heterogeneous effects of uncertainty indices toward diverse financial instruments pronounced during financial or economic turbulence. The DY approach indicates that total connectedness among financial assets varies significantly over time. The green bond market is the net receiver, while ishares Global Clean Energy ETF (ICLN) and VanEck Low Carbon Energy ETF (SMOG) indices transmit the shocks for the whole period. The findings suggest that holdings in the green bond market after the health crisis offer greater hedging opportunities to investors. The results have significant ramifications for financing, hedging, and policymaking.
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    Corruption and SME Growth: The Role of Institutional Networking and Financial Slack
    (Cambridge University Press, 2021-02-10) Adomako, Samuel; Ahsan, Mujtaba; Amaankwah-Amoah, Joseph; Danso, Albert; Kesse, Kwabena; Frimpong, Kwabena
    In this study, we investigate the mediating effect of institutional networking on the relationship between perceived corruption and the growth of small and medium-sized enterprises (SMEs). We also examine the moderating impact of financial slack on the relationship between perceived corruption and institutional networking. We test our moderated mediation model using data from 212 SMEs operating in Ghana. The findings from the study show that perceived corruption is positively related to institutional networking and this relationship is amplified when levels of financial slack are greater. The findings also show that institutional networking positively mediates the relationship between perceived corruption and SME growth. Theoretical and practical implications are discussed.
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    COVID-19 and credit risk variation across banks: International insights
    (Wiley, 2024-05-26) Acheampong, Albert; Ibeji, Ngozi; Danso, Albert
    This paper focuses on utilizing non-performing loans (NPLs) as the primary indicator of credit risk to analyze how various bank and country-level characteristics influence changes in credit risk within and between banks across China, Europe, and the U.S. during the COVID-19 period. Over 4959 bank-quarter observations (from Q4 2019 to Q4 2021), it becomes evident that COVID-19 significantly contributes to the variation in NPLs, underscoring its adverse impact on credit risk. This pattern is consistent across all countries; however, Chinese banks exhibit more robust capabilities in managing credit risk exposure compared to their European and U.S. counterparts. These findings offer significant implications for policymakers, investors, and regulators who are concerned about the repercussions of global pandemics on financial institutions.
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    Credit information sharing and bank loan pricing: do concentration and governance matter?
    (Wiley, 2020) Fosu, Samuel; Danso, Albert; Agyei-Boapeah, Henry; Ntim, Collins G.
    The development of credit information sharing schemes in developing countries has gained significant attention in recent times along with ongoing financial sector reforms. In this paper, we provide first-hand evidence of the effect of credit information sharing on credit intermediation cost in these countries, and consequently ascertain the extent to which the credit information sharing–credit intermediation cost nexus may be accentuated by banking market concentration and governance quality. Using a large dataset covering 272 banks from 27 African countries over the 2004-2012 period, we uncover four new findings. First, we find that credit information sharing does reduce credit intermediation cost. Second, we show that the relationship between credit intermediation cost and credit information sharing is conditional on banking market concentration. Third, our findings suggest that governance quality moderates the effect of credit information sharing on credit intermediation cost. Finally, we find that banking market concentration reduces credit intermediation cost, but the effect is moderated by credit information sharing. Overall, our findings suggest that credit information sharing may serve as a useful policy tool for achieving financial sector stability in developing countries.
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    Credit Information Sharing and Loan Default in Developing Countries: The Moderating Effect of Banking Market Concentration and National Governance Quality
    (Springer, 2019-08-09) Fosu, Samuel; Danso, Albert; Agyei-Boapeah, Henry; Ntim, G. Collins; Adegbite, Emmanuel
    Departing from the existing literature, which associates credit information sharing with improved access to credit in advanced economies, we examine whether credit information sharing can also reduce loan default rate for banks domiciled in developing countries. Using a large dataset covering 879 unique banks from 87 developing countries from every continent, over a nine-year period (i.e., over 6,300 observations), we uncover three new findings. First, we find that credit information sharing reduces loan default rate. Second, we show that the relationship between credit information sharing and loan default rate is conditional on banking market concentration. Third, our findings suggest that governance quality at the country level does not have a strong moderating role on the effect of credit information sharing on loan default rate.
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    Does financial resource slack drive sustainability expenditure in developing economy small and medium-sized enterprises?
    (Elsevier, 2017-06-27) Boso, Nathaniel; Danso, Albert; Leonidou, Constantinos; Uddin, Moshfique; Adeola, Ogechi; Hultman, Magnus
    While firms continue to commit slack financial resources to sustainability causes, knowledge is lacking on how financial resource slack drives sustainability expenditure under varying conditions of market pressure and political connectedness in a developing-economy market. Using primary data from exporting small and medium sized enterprises in Nigeria, this study shows that increases in financial resource slack are associated with decreases in sustainability expenditure. Additionally, results indicate that the negative effect of financial resource slack on sustainability expenditure becomes positive when levels of market pressure are higher. However, the negative effect relationship is strengthened (i.e. becomes more negative) when levels of political connectedness are greater. We discuss theoretical and managerial implications of these findings.
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    The Effect of Export Marketing Capabilities on Export Performance: Moderating Role of Dysfunctional Competition
    (Elsevier, 2017-09-17) Boso, Nathaniel; Adeola, Ogechi; Danso, Albert; Assadinia, Shahin
    This study utilizes multiple-informant and time-lagged primary data from 162 industrial exporting firms in Sub-Saharan Africa to contribute to an understanding of when export marketing capabilities can be deployed to drive export performance. The study finds that market responsiveness capability drives export performance when it is deployed together with a product innovation capability. The joint effect of both capabilities on export performance is weakened at high levels of dysfunctional competition in export market environment. The findings suggest that a stronger capability to respond to export market needs and a greater competence in introducing new products in export markets are not always beneficial in Sub-Saharan African markets as the resulting export performance outcome is dependent upon degrees of dysfunctional competition.
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    The effects of stakeholder integration on firm-level product innovativeness: Insights from small and medium-sized enterprises in Ghana
    (R&D Management, 2019-04-16) Adomako, Samuel; Amankwah-Amoah, Joseph; Danso, Albert
    In spite of growing research on the influence of external stakeholders on firm outcomes, there is a paucity of research on how they influence innovation in emerging economies. In addition, the specific environmental factors that may influence the effect of stakeholder integration (SI) on firm innovation is less understood. Using data collected from 248 small and medium-sized enterprises (SMEs) in Ghana, this paper develops and tests a model that examines the relationship between SI and firm-level product innovativeness. The findings from the study indicate SI positively relates to product innovativeness. Moreover, under conditions of higher competitor pressure and greater customer expectations, the effect of SI on product innovativeness is amplified. Contributions for theory and practice are discussed
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    Entrepreneurial alertness and new venture performance: facilitating roles of networking capability
    (Sage, 2018-01-10) Adomako, Samuel; Danso, Albert; Boso, Nathaniel; Narteh, Bedman
    An ability to act upon an entrepreneurial opportunity has been noted to be a major driver of new venture success. However, scholarly knowledge is limited on how and when entrepreneurs’ alertness to entrepreneurial opportunities drives new venture success. The current study addresses this gap in the entrepreneurship literature by arguing that variations in new venture performance are a function of levels of entrepreneurial alertness and networking capabilities. Using primary data gathered from 203 new ventures operating in a sub-Saharan African economy, Ghana, the study finds that increases in the levels of entrepreneurial alertness are related to increases in new venture performance. Additionally, the study finds that, under conditions of increased use of social and business networking capabilities, the potency of entrepreneurial alertness as a driver of new venture success is amplified. Theoretical, managerial and policy implications of these findings are discussed.
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    Entrepreneurial orientation, environmental sustainability and new venture performance: Does stakeholder integration matter?
    (Wiley, 2018-07-11) Amankwah-Amoah, J.; Danso, Albert; Adomako, Samuel
    Previous research has theorised that the link between entrepreneurial orientation (EO) and performance is mediated by environmental sustainability orientation (ESO). However, firm-level factors that may moderate this relationship are lacking. This paper attempts to fill this gap by examining how and when EO enhances new venture performance by considering ESO as mediator and stakeholder integration as an important contingent factor. Using primary data obtained from 242 chief executive officers (CEOs)/entrepreneurs, we found that the indirect relationship between EO and new venture performance is strengthened at high levels of stakeholder integration. Theoretical and practical implications are discussed