Compliance with Shareholders’ Rights and Profitability of Medium Scale Enterprises in Ghana

International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue IX, September 2020 | ISSN 2454–6186

Compliance with Shareholders’ Rights and Profitability of Medium Scale Enterprises in Ghana

Simon Peter Tsekpo
Kings University College, Accra, Ghana, West Africa

Abstract: This is an empirical investigation into the impact of compliance with shareholders’ rights on the profitability of medium scale enterprises (MSEs) in Ghana. It is an exploratory research based on descriptive survey design, and political theory of corporate governance. Questionnaire is the major research instrument used; and1010 Respondents participated in the study. It is a pure quantitative research and the data passed basic parametric tests of normality and outlier. The major findings of the research are: MSEs in Ghana largely comply with shareholders’ rights (up to 67% compliance rate is observed in this research); compliance to shareholders’ rights has circa 8% insignificant direct association with the profitability of Ghanaian medium scale enterprises; and compliance with shareholders’ rights has non-significant positive impact on the profitability of MSEs in Ghana after controlling managers’ qualifications. The major limitation of this study is that it lacks comparative empirical analysis; as such, the generalization of its findings is very much limited to Ghanaian MSEs only. Therefore, it would not be out of place for a similar study to be carried out in other countries (for example, the English-speaking countries of West Africa). It would also be necessary if profitability figures from audited annual reports of MSEs are incorporated in future study as this research did not incorporate them.

Keywords: Corporate Compliance, Medium Scale Enterprises, Profitability, Shareholders’Rights

I. INTRODUCTION

Medium scale enterprises form part of every country’s economic activity; and as they grow and expand, the economy also grows and expands (Asunka, 2017). Medium scale enterprises (MSEs) play important roles in nation building by creating employment, alleviating poverty, and promoting economic development (Adjei, Oteng & Fianu, 2014). Medium scale enterprises have no universal definition because countries use varying criteria to define them. The Ghana Statistical Service (GSS) defines small and medium enterprises as business entities with less than 10 employees. Alternatively, the National Board for Small Scale Industries (NBSSI) in Ghana combines both the fixed asset and number of employees’ criteria to define Small and Medium Scale Enterprises. Thus small enterprises employ between 6 and 29 people or with fixed assets not exceeding US$100,000 excluding land and building. However, those with staff size between 30 and 100 are classified as medium sized firms. Agyapong (2010) asserts that medium enterprises employ between 30 and 99 employees with fixed assets of up to USD1million.

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