Factors influencing quality corporate governance in Sub Saharan Africa: an empirical study

Abstract

Purpose

This study aims to examine the factors influencing the quality of corporate governance in South Africa (SA). Firm-level variables including performance, firm size, leverage, investment opportunities and audit quality were identified from the corporate governance literature.

Design/methodology/approach

The study used ordinary least squares regression on firm-specific and corporate governance variables obtained from panel data of 247-firm years obtained from the annual reports of the 50 largest companies listed on the Johannesburg Stock Exchange (JSE) Securities Exchange of SA.

Findings

This study found leverage, firm size and investment opportunities as the main factors influencing the quality of corporate governance in SA.

Research limitations/implications

The research findings should be interpreted in the light of the following limitations. First, the study sample consists of the 50 largest firms listed in the JSE of SA. Because these are large companies, the results may not be generalized to other smaller firms operating in SA. Second, this study is constrained to SA. Firms in other developing countries may differ from their SA counterparts.

Originality/value

The results of this study are important to the King Committee and other corporate governance regulators in Sub-Saharan Africa, in their effort to improve corporate governance practices and probably minimize corporate failure and protect the well-being of the minority shareholders. Furthermore, the study contributes to our understanding of the variables affecting the quality of corporate governance in developing economies of Africa.

Citation

Waweru, N. (2014), "Factors influencing quality corporate governance in Sub Saharan Africa: an empirical study", Corporate Governance, Vol. 14 No. 4, pp. 555-574. https://doi.org/10.1108/CG-02-2013-0024