Browsing by Author "Fosu, Samuel"
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Item Open Access Bank opacity and risk-taking: Evidence from analysts’ forecasts(Elsevier, 2017-11-01) Fosu, Samuel; Ntim, Collins G.; Coffie, William; Murinde, V.We depart from existing literature by invoking analysts’ forecasts to measure banking system opacity and then investigate the impact of such opacity on bank risk-taking, using a large panel of US bank holding companies, over the 1995–2013 period. We uncover three new results. Firstly, we find that opacity increases insolvency risks among banks. Secondly, we establish that the relationship between opacity and bank risk-taking is accentuated by the degree of banking market competition. Thirdly, we show that the bank business model moderates the risk-taking incentives of opaque banks, albeit only marginally. Overall, these findings suggest that the analysts forecast measure of bank opacity is useful for understanding risk-taking by publicly-traded banks, with important implications for bank stability.Item Open Access Banking competition in Africa: Subregional comparative studies(Elsevier, 2013-02-18) Fosu, SamuelThis paper examines the extent of banking competition in African subregional markets. A dynamic version of the Panzar–Rosse model is adopted beside the static model to assess the overall extent of banking competition in each subregional banking market over the period 2002 to 2009. Consistent with other emerging economies, the results suggest that African banks generally demonstrate monopolistic competitive behaviour. Although the evidence suggests that the static Panzar–Rosse H-statistic is downwards biased compared to the dynamic version, the competitive nature identified remains robust to alternative estimators.Item Open Access 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, EmmanuelWe 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.Item Open Access Capital structure, product market competition and firm performance: Evidence from South Africa(Elsevier, 2013-03-06) Fosu, SamuelThis paper investigates the relationship between capital structure and firm performance, paying particular attention to the degree of industry competition. The paper applies a novel measure of competition, the Boone indicator, to the leverage-performance relationship. Using panel data consisting of 257 South African firms over the period 1998–2009, this paper examines the effect of capital structure on firm performance and investigates the extent to which the relationship depends on the level of product market competition. The results suggest that financial leverage has a positive and significant effect on firm performance. It is also found that product market competition enhances the performance effect of leverage. The results are robust to alternative measures of competition and leverage.Item Open Access Corporate governance and dividend pay-out policy in UK listed SMEs: The effects of corporate board characteristics(Emerald Publishing Limited, 2017-10-07) Elmagrhi, M.H.; Ntim, Collins G.; Fosu, Samuel; Crossley, R.M.; Vu, T.V.Purpose: This paper examines the extent to which corporate board characteristics influence the level of dividend pay-out ratio using a sample of UK small and medium-sized enterprises (SMEs) from 2010 to 2013 listed on the Alternative Investment Market. Design/methodology/approach: The data is analysed by employing multivariate regression techniques, including estimating fixed effects, lagged effects and two-stage least squares regressions. Findings: The results show that board size, the frequency of board meetings, board gender diversity and audit committee size have a significant relationship with the level of dividend pay-out. Audit committee size and board size have a positive association with the level of dividend pay-out, whilst the frequency of board meetings and board gender diversity has a significant negative relationship with the level of dividend pay-out. By contrast, the findings suggest that board independence and CEO role duality do not have any significant effect on the level of dividend pay-out. Originality/value: This is one of the first attempts at examining the relationship between corporate governance and dividend policy in the UK’s Alternative Investment Market, with the analysis distinctively informed by agency theoretical insights drawn from the outcome and substitution hypotheses.Item Open Access Corporate Multinationality and Acquirer Returns(Wiley, 2018-10-15) Agyei-Boapeah, H.; Fosu, Samuel; Ntim, Collins G.This paper provides evidence on how corporate multinationality from the perspective of acquiring firms relates to M&A returns. Using multivariate regressions and a large dataset of over 6,000 M&As (both cross-border and domestic) by UK firms during 1987 to 2014, the paper finds multinationality to be associated with significantly higher short-run announcement returns and long-run operating performance. While the multinationality premium (higher M&A returns for multinationals) persists over time, it seems to be restricted to firms with superior resource/managerial capabilities and minimal agency problems. Finally, the multinationality premium appears to be driven by foreign acquisitions into advanced economies. The results are robust to correcting for sample selection bias and controlling for several firm and deal characteristics, as well as accounting for firm-, industry-, and year-fixed effects. Collectively, the findings imply that multinationality could be a source of value creation for acquiring firms, particularly in foreign acquisitions, which tend to be complex, and thereby, require superior managerial capabilities to succeed.Item Open Access 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.Item Open Access 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, EmmanuelDeparting 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.Item Open Access Credit information, consolidation and credit market performance: Bank-level evidence from developing countries(Elsevier, 2014-01-20) Fosu, SamuelPaying particular attention to the degree of banking market concentration in developing countries, this paper examines the effect of credit information sharing on bank lending. Using bank-level data from African countries over the period 2004 to 2009 and a dynamic two-step system generalised method of moments (GMM) estimation, it is found that credit information sharing increases bank lending. The degree of banking market concentration moderates the effect of credit information sharing on bank lending. The results are robust to controlling for possible interactions between credit information sharing and governance.Item Open Access Environmental Policy, Environmental performance and financial distress in China: Do top management team characteristics matter?(Wiley, 2018-09-03) Ntim, Collins G.; Fosu, Samuel; Shahab, Y.; Chengang, Y.; Ullah, F.This study investigates the effect of environmental performance that is driven by good environmental policies, regulations and management on firm’s financial distress, and consequently, ascertains the extent to which top management teams’ (TMT) characteristics can moderate the environmental performance–financial distress nexus in China using 749 firms over the 2009-2014 period (i.e., generating over 3,000 individual observations). Our findings are two-fold. First, our results indicate that increased environmental performance that is driven by good environmental policies tend to strategically reduce the extent of firm financial distress. Second, this nexus is moderated by TMT gender diversity, foreign exposure and political connection. We interpret our findings within neo-institutional, upper echelons and risk management theoretical perspectives. The findings are robust to the use of alternative measures of financial distress, estimation techniques and endogeneity problems.Item Open Access Foreign equity portfolio flow and corruption: A cross-country evidence(Wiley, 2020-07-24) Kwabi, Frank; Boateng, Agyenim; Fosu, Samuel; Zhu, Tingting; Chijoke-Mgbame, Aruoriwo MarianThis study examines the impact of foreign equity portfolio investment on corruption. Employing a large dataset of 44 countries from 2001 to 2015 and three different measures of corruption, our results show that foreign investors from well-governed countries tend to foster public accountability, reduce asymmetry information and corruption. We find empirical evidence that foreign equity portfolio investment interacts with stock market development and central bank transparency to reduce corruption. Our results suggest that stock market development and central bank transparency are regarded as complementary by international portfolio investors. Further analysis indicates that corruption appears more prevalent in countries where domestic investors dominate the stock market. Our results are robust to endogeneity using dynamic generalized methods of moments (GMM). The findings suggest that attracting foreign equity investors reduces corruption, implying significant benefits for portfolio diversification.Item Open Access How does banking market power affect bank opacity? Evidence from analysts' forecasts(Elsevier, 2018-08-30) Fosu, Samuel; Danso, Albert; Agyei-Boapeah, H.; Ntim, Collins G.; Murinde, V.Whilst the ongoing banking regulatory reforms towards a comprehensive Basel III framework emphasise bank transparency, disclosure and a competitive banking market environment, very little is known about the empirical relationship between bank opacity and banking competition. We investigate the impact of competition, as measured by the individual bank's pricing power in the banking market, on bank opacity using a large sample of US bank holding companies over the 1986–2015 period. We uncover new evidence, on the competition-bank opacity nexus, which suggests that banks with higher market power and operating in less competitive banking markets have lower analysts' forecast errors and dispersions and may thus be less opaque. This effect is more pronounced for the 2007–09 global financial crisis period. Our evidence is robust to controlling for analysts' characteristics, bank fixed-effects and endogeneity problems.Item Embargo Information Asymmetry, Leverage and Firm Value. Do crisis and growth matter?(Elsevier, 2016-05-10) Fosu, Samuel; Danso, Albert; Ahmed, Wasim; Coffie, WilliamDrawing on pecking order and agency cost theories, we assess the extent to which information asymmetry is an important determinant of firm value and the extent to which this relationship is conditional on the leverage level of firms. We also assess the impact of information asymmetry on firm value during the pre and post 2007/09 financial crisis period and for high and low growth opportunity firms. Using a large sample of UK firms, our empirical findings suggest that information asymmetry adversely impacts firm value, and that this effect decreases with firm's leverage. We also find that leverage has a negative effect on firm value, and that the marginal effect of leverage is lower for information asymmetric firms. Further, we find that the relation between information asymmetry and firm value is more pronounced in the post-crisis period than the pre-crisis period. Finally, we show that the impact of information asymmetry on firm value is higher (lower) for firms with high (low) growth opportunities.Item Open Access Leverage and firm investment: the role of information asymmetry and growth(Emerald, 2018-03-04) Danso, Albert; Lartey, Theophilus; Fosu, Samuel; Owusu-Agyei, Samuel; Uddin, MoshfiqueThis paper demonstrates how financial leverage impacts firm investment and the extent to which this relationship is conditional on the level of information asymmetry as well as growth. The paper relies on data from 2403 Indian firms during the period 1995–2014, generating a total of 19,544 firm-year observations. Analysis is conducted by using various panel econometric techniques. Drawing insights from agency theories, the paper uncovers that financial leverage is negatively and significantly related to firm investment. It is also observed that the impact of financial leverage on firm investment is significant for high information asymmetric firms. Finally, the paper shows that the relationship between leverage and firm investment is significant for low-growth firms. However, no significant relationship is found between leverage and investment for high-growth firms. This paper provides fresh evidence on the leverage-investment nexus and, to the authors’ knowledge, it the first paper to examine the extent to which this leverage-investment relationship is driven by the level of information asymmetry.Item Open Access Multifactor explanation of security returns in South Africa(International Journal of Management Practice, 2014) Fosu, Samuel; Coffie, William; Chukwulobelu, O.This paper evaluates the performance of the Fama and French threefactor model in South Africa for individual securities. We employed a multivariate time series methodology similar to Fama and French. The empirical results contradict the theoretical proposition of the Fama–French model and are inconsistent with the results documented by most studies in the developed and some emerging markets. The size and value premia are very weak when included in the regression model. Furthermore, the Fama and French three-factor model is unable to explain the return-generating process of securities trading on the Johannesburg Stock Exchange. This has important implication for corporate managers, investors as well as fund and portfolio managers in terms of estimating cost of equity, rate of return and portfolio allocation.Item Open Access Trustee board diversity, governance mechanisms, capital structure and performance in SMEs: The case of UK Charities(Emerald Publishing Limited, 2018-01-23) Elmagrhi, M.H.; Ntim, Collins G.; Fosu, Samuel; Abongeh A. T.; Malagila, J.; Tunyi, A.A.Purpose: This paper examines the extent to which corporate board characteristics influence the level of dividend pay-out ratio using a sample of UK small and medium-sized enterprises (SMEs) from 2010 to 2013 listed on the Alternative Investment Market. Design/methodology/approach: The data is analysed by employing multivariate regression techniques, including estimating fixed effects, lagged effects and two-stage least squares regressions. Findings: The results show that board size, the frequency of board meetings, board gender diversity and audit committee size have a significant relationship with the level of dividend pay-out. Audit committee size and board size have a positive association with the level of dividend pay-out, whilst the frequency of board meetings and board gender diversity has a significant negative relationship with the level of dividend pay-out. By contrast, the findings suggest that board independence and CEO role duality do not have any significant effect on the level of dividend pay-out. Originality/value: This is one of the first attempts at examining the relationship between corporate governance and dividend policy in the UK’s Alternative Investment Market, with the analysis distinctively informed by agency theoretical insights drawn from the outcome and substitution hypotheses.