Kingsley Opoku Appiah

Predicting Corporate Failure: Some Empirical Evidence from the UK

Purpose – The purpose of this paper is to use relevant financial information of private medium-sized failed and non-failed manufacturing firms in the UK, during the period 1994-2004 to determine whether corporate failure can be predicted by developing a Z-score model. Design/methodology/approach – Multiple discriminant analysis is used to develop the Z-score to support the notion that Z-score is an innovation to overcome the numerous difficulties associated with using single ratios to measure companies’ health or risk of failure. Findings – This paper advances the notion that the net profit margin is superior to the gross profit margin in discriminating between failed and non-failed UK manufacturing companies in terms of its significant contribution to the Z-score, though the latter exceeds the former slightly using the univariate analysis. Originality/value – This research contributes to the area of benchmarking by providing a method to more accurately predict corporate failure.

Predicting corporate failure: a systematic literature review of methodological issues

Purpose – This paper aims to review the existing literature systematically so as to contribute towards a better understanding of methodological problems of the classical statistical techniques, artificially intelligent expert systems and theoretical approaches to solve the corporate failure syndrome. Design/methodology/approach – This paper presented a systematic review of 83 articles reporting 137 prediction failure models published within 1966-2012 in scholarly reviewed journals in four main disciplines, namely, accounting, finance, banking and economics. The authors performed the systematic literature review with five main sources, namely, Science Direct, Google Scholar, Wiley Interscience, Metalib, Web of Science and Business Source Complete of the Social Sciences. The review modified the approaches used by Aziz and Dar (2006), Ravi and Ravi (2007) and Balcaen and Ooghe (2006). Findings – The results indicate significant body of prior literature on prediction of corporate failure, but a theoretically ...

Remuneration committee and corporate failure

Purpose – This study aims to examine the role the structure of corporate boards plays in the failure of the firm. Specifically, it examines whether the remuneration committee is related to corporate failure in the UK. Design/methodology/approach – The study uses 1,835 firm-year observations for 98 failed and 269 non-failed UK-listed non-financial firms between the periods of 1994 and 2011. This study used pooled cross-sectional, fixed and random effects LOGIT models to estimate whether corporate failure is related to remuneration committee in the UK. Findings – The findings indicate that corporate failure is negatively related to the independence of the remuneration committee chairman and remuneration committee’s effectiveness but not remuneration committee’s presence, size and meetings. However, a positive and significant relationship was observed between corporate failure and remuneration committee independence. Practical implications – The findings of the study provide support for the appropriateness o...

Compliance with international financial reporting standards: the case of listed firms in Ghana

Purpose - This study aims to examine the association between five firm-specific characteristics and the level of compliance with International Financial Reporting Standards (IFRS) by companies listed on Ghana Stock Exchange. The five firm-specific characteristics are firm size, profitability, leverage, auditor type and firm age. Design/methodology/approach - The study uses dataset from 31 listed Ghanaian firms from 2008 to 2012. Random effect is used to examine the influence of the predictive variables on the level of IFRS corporate compliance. Findings - The result reveals a positive significant relationship between the level of compliance and firm size, auditor type, cross-listing and sector (information and communications technology (ICT) and agro-forestry). On the contrary, the level of compliance exhibits a negative significant association with leverage and firm age. It is observed that the level of compliance is not related to profitability. The results are robust to different model specifications. Practical implications - This study identifies firm-specific characteristics that influence IFRS compliance by listed firms in Ghana. This would aid accounting policy makers to institute strategies to encourage compliance with IFRS by the listed firms. Originality/value - The study contributes to financial reporting literature relating to developing economies and Ghana, in particular.

Corporate governance and financial performance of listed banks: evidence form emerging market

One of the important elements in this centurys business world that has received attention is corporate governance. The recent economic scandals and financial crisis have made it necessary to investigate the role of corporate governance on firm performance. The survival of firms has thus been associated with the existence and application of good corporate governance practices. This study examines the effect of corporate governance on financial performance of banks listed on the Ghana Stock Exchange. The study employs secondary data collected from 60 firm-year observations, consisting of seven listed banks from 2004 to 2012. The study employs pooled cross-sectional ordinary least squares regression analysis to predict the effect of the corporate governance variables on the financial performance of the listed banks. The findings from the study suggest a negative statistical significant association between board composition and the performance indicators, except for return on equity of the banks. CEO tenure is positively associated with the performance indicators of the banks. It is recommended that the listed banks should implement policies that would define the number of outside directors on their boards to enhance maximum benefits from the practice of good corporate governance.

Credit risk management of Ghanaian listed banks

Purpose – The study aims to assess credit risk management practices within financial institutions in Ghana. Specifically, the study compares credit risk management practices of listed banks in Ghana with Basel II (1999). Design/methodology/approach – The analysis is based on data gathered from varied sources, namely, use of questionnaires, analysis of internal credit policies and procedure manuals and semi-structured interviews and discussions with credit risk managers of the selected banks in May 2007 and October 2014. Findings – Overall, the credit risk management practices within listed banks in Ghana are in line with sound practices. The only dissimilarity, however, is the role of the board of directors in defining acceptable types of loans and maximum maturities for the various types of loans. The listed banks in Ghana are also exposed to credit risks associated with granting both corporate and small business commercial loans and the use of collaterals to mitigate their credit risk exposures. Practic...

An Application of Activity Based Costing in Public Higher Learning Institutions in Ghana: A Pilot Study

Purpose – This paper examines the extent to which the Activity Based Costing framework can be applied to Public Higher Learning Institutions in Ghana.Design/methodology/approach – The paper follows Krishnan (2006) study’s methodology and objectives. Specifically, the paper develops a costing methodology for the Higher Learning Institution.Findings – It is clear that Activity Based Costing brings new cost control and performance appraisal of cost centres and units. As well, the problems of funding constraint in the Ghanaian Public Higher Learning Institutions could also be overcome with a good Activity Based Costing structure in place.Research limitations/implications – The discussion mainly focuses on Activity Based Costing within the context of Ghanaian Public Higher Learning Institutions.Originality/value – This paper provides conceptual insights on the application of Activity Based Costing among Public Higher Learning Institution in Ghana.