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After completing this case, students should be able to: identify and compute relevant cash flows in relation to a real estate project and compute the net present value (NPV). Determine the target return or cost of capital (by looking at historical economic indicators). Design or formulate a sensitivity analysis to determine the drivers of the project value. Evaluate real estate and other investments taking qualitative and quantitative factors into consideration. Demonstrate the computation of a break-even rate to determine the minimum or maximum revenue or cost required for a project to be viable.

This case study is about the Golden Beak Securities Pension Fund that wanted to invest in a Hostel Project in one of the universities in Ghana. Most universities in Ghana faced an acute shortage of on-campus accommodation. Also, the Government of Ghana, in 2017, implemented a programme to make Senior High School in Ghana free. This was expected to increase the number of students who will enter the existing universities. The project was therefore seen as strategic, as it would help ease the pressure of on-campus accommodation while providing diversification for the pension fund. As part of the investment committee’s (IC) quest to improve the skill set available to it, especially in relation to real estate investments, Esi Abebrese was appointed as one of the members of the IC of GSB. Her main task was to collect information on key macroeconomic variables, as well as granular information on project costs and revenues and conduct investment appraisal. Esi was scheduled to make a presentation to the IC on the 15th of October 2019 following which the Committee will debate and make a decision. The project had an estimated cost of GH¢52m with a total number of 3,424 student beds and ancillary facilities. Undertaking the project required moving funds from investments in money market securities with one of the banks in Ghana. The investments in the money market securities were currently yielding about 16% a year. The determination of the cost of capital was critical and Esi and Nana eventually settled on a long-term weighted average cost of capital of 14%. This was after considering the trend of inflation, monetary policy rates, treasury rates, stock market returns and a report on returns on commercial real estate properties in Ghana. An exit capitalisation rate of 20% was also estimated for the purposes of determining the value of the property at the end of the investment horizon. Esi also obtained estimates of cost and revenue for the project and proceeded to carry out a feasibility analysis on the project. This consisted of an NPV analysis and sensitivity analysis on various factors to determine the drivers of the project value. The IC had to take several factors (both quantitative and qualitative) into consideration before making a decision. Esi believed that these factors included the diversification of the fund’s assets, the return on investment, potential oversupply of hostel accommodation, the social responsibility of providing student accommodation and the impact of any prolonged shutdown of the university.

Masters/advanced undergraduate.

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CSS 1: Accounting and Finance.

The purpose of this paper is to explore the relevance of corporate governance in the quest to attain organizational efficiency in the working capital management of listed firms. There is a consensus that efficiency of working capital management is vital for firm’s growth and survival, yet another consensus is the role of corporate governance in limiting managerial self-serving behavior and ultimately improving firm’s efficiency. If the foregoing views hold, then the empirical question “Is corporate governance important for firm-level working capital efficiency?” becomes important.

Panel data on 13 non-financial firms listed on the Ghana Stock Exchange were employed in a pooled OLS regression.

The results of the study indicate mostly a negative effect of internal governance mechanisms on the cash conversion cycle, the inventory, receivables’ periods and payables’ periods, implying that governance structures do affect the efficiency of working capital management. Firm characteristics like age, size and profitability also emerged as relevant influences on the efficiency of working capital management.

Data for the study cut across several sectors thus limiting the specificity with which findings can be applied.

These findings have implications for board composition in the quest for firm-level efficiency while raising the need for more industry-specific enquiries.

This study aims to examine how woman corporate leadership indicators and environmental, social and governance (ESG) disclosure in listed banks on Ghana Stock Exchange are related.

Data was obtained from the audited annual reports of the banks for the period 2006–2020. Empirical result estimation was achieved using Panel Corrected Standard Errors.

The result revealed that female chief executive officer (CEO), female board chairperson and board gender diversity are associated with higher disclosure of ESG issues in listed banks in Ghana in overall terms. However, in terms of individual disclosures, female board chairperson positively impacts social disclosure, whereas both female CEO and female board chairperson affect governance disclosure positively.

In this era of business where there is much emphasis on green business and investment by various stakeholders for purposes of ensuring business legitimacy, the result implies that banks must consider females to occupy the positions of CEO and board chairperson since that can help to improve ESG performance of banks.

In this era of business where there is much emphasis on green business, socially responsible investment and impact investment by various stakeholders, the result implies that banks must consider improving the representation of women in leadership since that can help to improve ESG performance of banks and hence ability to attract more investors.

To the best of the authors’ knowledge, this is the first study to provide empirical evidence from a developing country perspective in Sub-Saharan Africa that gender of bank leadership has implications for ESG disclosure.

This study aims to examine the impact of economic freedom and corruption on bank stability in sub-Saharan Africa (SSA).

This study uses 38 countries in SSA from 2008 to 2019 using system GMM technique.

The authors found that greater economic freedom increases economic efficiency through improving bank stability. Besides this, the authors also find that banks in environments with greater business freedom, financial freedom, trade freedom and investment freedom are less prone to solvency. The results also show that corruption improves bank stability, suggesting evidence of the “grease the wheels” hypothesis.

The results suggest to policymakers that a high economic freedom may be an appropriate policy toward enhancing bank stability. Besides this, the results also suggest to policymakers to prioritize addressing the core issues that encourage corruption to extort bribes.

This study provides insightful discussion on whether economic freedom and its subcomponents and corruption have an effect on bank stability in SSA.

This study aims to provide empirical evidence of the pass-through effect of monetary policy on bank lending rates vis-à-vis the potential moderating effects of financial sector development and institutional quality in Africa.

The study uses robust fixed effects panel data estimation techniques and data from 1990 to 2017 across 37 countries in Africa.

The results show that financial development aids in the effectiveness of monetary policy transmission. A decomposition of financial development into financial institution development and financial market development shows that financial institutional development is more influential with regard to effectiveness of the interest rate pass-through compared to financial market development. This study again shows that improvements in the quality of institutions reduced lending rates in African economies.

The findings present relevant policy implications regarding effective transmission of monetary policy, by linking the pursuit of institutional quality, characterized by the control of corruption, political stability, regulatory quality, rule of law and the voice of accountability and development of financial institutions with lending rates and ultimately the demand for growth capital.

This study contributes to the literature on the factors influencing the effectiveness of monetary policy. This study considers financial sector development and institutional quality as conduits to monetary policy effectiveness in developing African countries.

The purpose of the study is to explore the implications of global financial integration on host economies in Sub-Saharan Africa (SSA). The study tests the competing views on the impact of foreign bank penetration on private sector access to credit in developing host economies.

Using data on a panel 25 SSA economies over a period of 22 years from 1995 to 2016, the study employs fixed effects and Prais-Winsten estimations as well as generalized methods of moments (GMM) to test the foreign bank impact.

The findings show support for the hypothesis that global financial integration has positive implications for participating economies. In other words, financial sector liberalization and deregulation leading to the influx of foreign banks has positive implications for access to credit by the private sector in SSA economies. The study also finds other standard determinants of access to credit like lending rate and broad money supply conforming to the existing literature in terms of impact.

Overall, the findings hold relevant implications for banking sector policies and the financial sector in general regarding the priority that policy makers and advisors attach to reforming financial sector policies.

This study aims to examine the relationship between corporate governance, including board gender diversity and bank risk-taking behaviour in Ghana.

This research uses panel corrected standard errors estimation on 26 selected banks over an 11-year period from 2006 to 2016.

Using three proxies for bank risk-taking and two proxies for gender diversity for the purposes of checking robustness, this study finds ample evidence to support the important influence of corporate governance and board gender diversity on bank risk-taking behaviour. The findings suggest that independence, gender diversity, size and leadership consolidation can have significant effects on the risk profile of banking firms. The initial finding of the study suggests the possibility that female board gender diversity on Ghanaian banking boards follows the tokenism theory. Subsequent estimations seem to provide evidence to suggest that attaining a critical mass of female board members imposes a significant control on risk-taking behaviour by banks.

This study has important implications for gender diversity in board construction within the banking sector and the discourse on bank risk-taking in an emerging market context.

The purpose of this study is to assess the impact of corporate governance variables on the quality of bank loan portfolios.

The study used a panel-corrected standard errors estimation model with the most recent 11-year data from 2006 to 2016 on selected Ghanaian banks.

The findings indicate that corporate governance is relevant within the banking sector and plays a key role in improving loan quality. Having a large board with the attendant pool of expertize, boards with mostly non-executive members and duality of the CEO-board chair can be harnessed to improve bank loan quality. Female participation on boards seems to detract from good performance, creating the impression of tokenism in the Ghanaian banking sector.

The study has important implications for board construction within the banking sector and the discourse on bank asset quality.

This study aims to look at how corporate governance, specifically internal mechanisms of corporate governance, affects the value relevance of reported accounting earnings of listed firms on the Ghana Stock Exchange.

The study used the Ohlson valuation model with a panel dataset, employing pooled regression analysis with random effects.

The findings indicate that net asset value per share is value relevant on the Ghanaian market, and even more so when the board size is small or the CEO also doubles as the board chair. Board independence as captured by the percentage of non‐executive directors on the board is relatively irrelevant in the market valuation of shares, and when relevant has a negative effect.

The value relevance of accounting information on the Ghanaian financial market, by implication, requires that the necessary rules and supervision regarding financial reporting must be provided to ensure that the information that reaches the investing public is therefore a true reflection of the underlying economic value of firms, so that capital allocation decisions based on these sources will be efficient.

This study aims to examine the effect of corporate governance on firms' dividend payout policy in sub‐Saharan Africa. The study also aims to examine how dividend payout influences corporate governance.

Using a sample made up 27 Ghanaian firms, 177 Nigerian firms, 51 Kenyan firms, and 270 South African firms covering the period 1997‐2006, the paper employs a simultaneous panel regression model in its estimation.

The results show that board composition and board size exhibit significantly positive relationship with dividend payout in Kenya and Ghana, respectively. Institutional ownership positively influences dividend payout among South African and Kenyan firms. In the case of Nigeria, all the corporate governance measures show significantly negative effects on dividend payout. The findings clearly suggest that, with respect to South Africa, Kenya and Ghana, good corporate governance structures lead to high‐dividend payout, probably due to easy access to and low cost of external finance. However, in Nigeria, improving the governance structures may be associated with high‐earnings retention or low‐dividend payment in order to reduce cost of external finance. We found in the case of Ghana that, dividend payout positively affects board composition, suggesting that Ghanaian firms with high‐payout tend to adopt good corporate governance structures in order to ensure protection of shareholder interest. The findings of this study certainly have important policy implications.

This present study contributes to the corporate governance literature by looking at the importance of corporate governance in influencing firms' dividend behaviour in selected African countries.