Showing papers by "Samuel Kwaku Agyei published in 2013"

Mergers & Acquisition and Firm Performance: Evidence from the Ghana Stock Exchange

Abstract: Firm growth, improved efficiency and profitability are among the key benefits sought from mergers and acquisitions (M&A). This study is a modest attempt to seek for the effects M&As on the performance of firms in the Ghanaian Stock Market from 1999 to 2010. The study was accounting based and used univariate analysis with T-testing as well as panel data methodology for the analysis. The univariate analysis revealed dwindling profitability after the merger for all the firms with the t-test showing significant difference in profitability before and after merger. The evidence from panel methodology indicates that M&A has significant negative effect on the profitability of firms. It is therefore imperative that M&As are properly planned, executed and evaluated. Specifically, efforts should be made to attract and retain key personnel of the merged firms through performance contracts or bonuses, proper conflict resolution measures should be put in place and conscious effort made to reap the expected benefits of the merger. This is because gains from mergers and acquisitions do not just occur. Additionally, our results indicate that risk and firm size have significantly negative relationship with firm profitability while debt capital and firm growth enhance firm profitability. Keywords : Merger and Acquisition, Profitability, Ghana

Determinants of working capital requirement and policies of banks in Ghana

Abstract: Efficient management of working capital guarantees not only the future cash flow of a firm but also its profitability. This study attempts to find out the determinants of working capital requirements and working capital management policies in the Ghanaian Banking Industry. The study used bank level data (1999-2008) from the Bank of Ghana. Using panel methodology within the random or fixed effects framework, the study concluded that while Cash Conversion Cycle, Size and Age of a bank have significantly positive impact on bank working capital requirement, leverage, cash position and deposit herfindahl index have a significantly negative effect on bank working capital requirement. Profitability, cash position, growth size and deposit herfindahl index are found to be the key determinants of working capital policies of banks in Ghana. Consequently, the study finds support for the pecking order and agency theories even though no support was found for the lifecycle theory. Thus to ensure efficient working capital management, banks in Ghana would be better off pursuing growth strategies geared towards obtaining greater proportion of the banking market and issue more short term debt instruments.