Corporate Governance And Financing Decisions: A Study of Ghanaian Listed Firms

ABSTRACT

Earlier studies on the Ghana stock exchange failed to consider the influence of institutional ownership and board committee on the financing decisions of the firms. This study examines the impact of institutional ownership and board committee on capital structure decisions. The study also examines the nature of the corporate board and financing pattern of the firms for the period under investigation. Twenty-nine (29) firms out of the total number of thirty-four (34), on the Ghana Stock Exchange, were used for the periods 2004 to 2011 based on the availability of data. Secondary data on board and ownership structure were obtained from the annual reports of firms and Ghana Stock Exchange facts book. Information on best governance practices were also from the annual reports and guidelines of Ghana‟s Securities and Exchange Commission. Using unbalance data with a maximum and minimum period of 8 and 3 years respectively, the fixed effect regression technique was used to examine the effect of board characteristics and ownership structure on financing decisions of the firms. A positive and significant relationship was found in the case of board size, board composition, institutional ownership and firm type. CEO duality, board committee and profitability register negative relationships with capital structure. Managerial ownership, growth and firm size recorded not significant relationships with financing decisions.