Title: TRANSPARENCY AND FINANCIAL PERFORMANCE OF LISTED MANUFACTURING FIRMS IN SELECTED COUNTRIES IN SUB-SAHARAN AFRICA
Authors:
Abayomi O. Asubiojo, Olayinka I. Oluwagbade and Olusola E. Igbekoyi
Abstract:
African firms have suffered performance evaluation setbacks in the global financial markets because of inadequacies in business and reporting practices occasioned by their inability to meet up with the dynamic changes in stakeholder expectations in recent times. The study investigated the effect of transparency on financial performance of listed manufacturing firms in selected countries in sub-Saharan Africa. The study adopted ex-post facto and explanatory research design. Each variable was described using descriptive statistics, and the influence of the independent variables and the strength of the association were evaluated using regression design. The data was sourced from secondary sources, specifically the audited annual and sustainability reports of 146 manufacturing businesses that are publicly listed on stock exchanges in sub-Saharan African countries. The sample size was established by the criterion sampling technique, which considered companies that were listed prior to 2011 and continued to be listed without delisting; in all, 62 companies were categorized into the material products, consumer goods, healthcare goods, and industrial sectors. The result of the analysis showed that the effect of transparency from 4 disclosure criteria (Risk, Social, Governance, and Financial). Risk transparency showed a negative significant effect on ROA and EVA, but a positive insignificant effect on ROE. Social transparency had a negative significant effect on ROA and ROE, while its effect on EVA was insignificant. Governance transparency had a positive insignificant effect on ROA and EVA but a negative insignificant effect on ROE. Financial transparency had a significant positive effect on ROA and EVA, but the effect on ROE was also positive but insignificant. The study concluded that transparency in disclosure of financial reporting enhances investors’ confidence which boosts financial performance. Therefore, the study recommends that Sub-Saharan African manufacturing firms should maximize the adoption of transparent disclosure to boost economic value and global relevance.
Keywords: Financial Performance, Risk transparency, Social transparency Governance transparency, Financial transparency, Return on assets (ROA), Return on equity (ROE), Economic value added (EVA).
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