Page 25 - DUT ICGA Abstract Book

CORPORATE GOVERNANCE PRACTICE CAPITAL STRUCTURE CHOICE AND CAPITAL ALLOCATION STRATEGIES TO SUPPORT CORPORATE FINANCIAL FINANCIAL PERFORMANCE OF MAJOR FINANCIAL FINANCIAL INSTITUTIONS IN IN ETHIOPIA
Mesele Shiferaw Kotiso *1 Dr Dr Ferina Marimuthu 2 Dr Dr Haruna Maama 3
*1 PhDstudentinFinancialAccountingatUNISA Email:13690256@mylife unisa ac za DepartmentofAccountingand Finance College of Business and Economics Wolaita Sodo University Ethiopia
2 Supervisor Durban University of Technology Email: ferinas@dut ac za 3
Co-Supervisor: Durban University of Technology Email: harunam@dut ac za Abstract
The need for implementing effective corporate corporate governance practice (CGP) in in fin corporate corporate financial institutions has gain significant attention around the world Due to high-profile corporate collapses and failure in in in early 2000s has been changed the image of accounting and and auditing and and regulatory environments which criticized the the corporate governance and board of directors’ efficiency Effective CGP pave the the way for for access to finance lower cost of capital and and better corporate financial performance (CFP) and and have favourable treatment by all stakeholders In contrast poor poor CGP not only leads to poor poor CFP but also risky financing patterns and and that leads to macroeconomic crisis The Implementation of effective CGP and and appropriate capital structure choice in fin fin in the financial financial sector can enhance Ethiopian financial financial institution CFP critically important since this study conducted in in the absence of capital market weak regulations poor accounting standards and and and closed foreign participants the financial sector is quite interesting and and and would acknowledge the interest of of investors The main objective of of this study is is to to to examine to to to what extent the components of CGP including board board board size board board board independence board board board educational qualification audit committee committee size audit committee committee accounting experience and credit management practice capital structure choice and capital allocation strategies to supports CFP in in in Ethiopian context The main theory used in in in this study is is is agency agency theory Since corporate governance problems primarily arises as the the result of agency agency conflict between different parties of corporations that link other corporate governance theories This study employs quantitative research research design with the mainstream positivist research research paradigms The census of of all major financial institutions incorporated which is is supervised by national bank of of Ethiopia
(NBE) for the the period of six years 2015-2020 All necessary data were obtained from the the audited financial statements of obtained from NBE WB IMF and individual financial institutions website that was analysed by applying descriptive and inferential statistics which is is is multiple regression panel data analysis The main finding of this study revealed that existence board independence the presence of audit committee financial leverage ratio and financial institution size has a a a a a a a a a positive significant influence on on CFP Therefore this study plays a a a a a a a a a significant role in in in in the the developments of of of interdisciplinary discussion about the the integration of of of components of of of CGP and capital structure to support CFP in fin in fin in underdeveloped financial institutions The finding will have a a a a a a a policy implication to formulate an effective CGP in the country KEYWORDS: Corporate governance practice capital structure choice financial institutions agency theory and corporate financial performance Book of Abstracts 23