Debt Financing, Information Sharing, and Profitability: Evidence from Listed Firms from an Emerging Economy

This study investigates how credit information sharing conditions debt financing to boost the profitability of 20 listed enterprises on the Ghana Stock Exchange between 2003 and 2013. We employ robust least squares and simultaneous bootstrapping models in a panel setting. Our findings show that the...

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Bibliographic Details
Published inJournal of African business Vol. 25; no. 3; pp. 409 - 426
Main Authors Osei, Jephthah Owusu, Sarpong-Kumankoma, Emmanuel, Abor, Joshua Yindenaba
Format Journal Article
LanguageEnglish
Published Binghamton Routledge 02.07.2024
Taylor & Francis Ltd
Subjects
Asymmetric information
Bootstrap method
Credit
Credit information sharing
Debt
Debt financing
Emerging markets
Financing
Ghana
Information sharing
Legislation
listed firms
Profitability
Stock exchanges
Ghana
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ISSN1522-8916
1522-9076
DOI10.1080/15228916.2023.2209356

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Summary:This study investigates how credit information sharing conditions debt financing to boost the profitability of 20 listed enterprises on the Ghana Stock Exchange between 2003 and 2013. We employ robust least squares and simultaneous bootstrapping models in a panel setting. Our findings show that the impact of debt financing on profitability increases when it is subject to information sharing and takes the shape of short, long, and total debts. In the worst-case situation, contingent debt financing reduces the negative impact of debt financing on profitability. Therefore, authorities must adopt laws and legislation that deepen, widen, and strengthen credit information sharing to offset the negative impact of information asymmetry on loan financing and business profitability.
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ISSN:1522-8916
1522-9076
DOI:10.1080/15228916.2023.2209356