Determinants of internal governance quality: Evidence from corporations in Ethiopia

Figures & data

Figure 1. Government and privately owned corporations (Source: The study findings).

Table 1. Description of surveyed corporations

Distribution of sample by type of corporation	Frequency of corporations
	Absolute	Relative
Industry	22	28.9%
Financial Service	17	22.4%
Trade	37	48.7%
Total	76	100.0%

Source: The study findings

Table 2. Description of the dependent variable and its dimensions

Variable	Obs	Mean	Std. Dec.	Min	Max
IGQS	76	14.39286	3.97596	4	19
Disclosure	76	3.111111	0.83536	2	4
Board	76	5.192308	1.97104	1	7
Ethics	76	1.692308	0.6694	1	3
Rights	76	5	0.84895	3	6

Source: The study findings

Table 3. Spearman correlation between the IGQS components

	IGQS	Disclosure	Board	Ethics	Rights
IGQS	1.0000
Disclosure	0.7226 ***	1.0000
Board	0.7718 ***	0.4732 ***	1.0000
Ethics	0.2763***	0.3141 ***	−0.0953	1.0000
Rights	0.6160***	0.4485***	0.5443***	−0.0633	1.0000

Notes: * * *p < 0.01, * *p < 0.05, *p < 0.1.

Source: The study findings

Table 4. Mean difference of IGQS dimensions by form of ownership

	Government-owned Mean	Privately Owned Mean	T-Value
Disclosure	3.75	3	3.4827***
Board	5.5	5.14	0.677
Ethics	2	1.64	2.0288**
Rights	5.75	4.88	4.0766***
IGQS	17	13.96	2.93***

Notes: * * *p < 0.01, * *p < 0.05, *p < 0.1

Source: The study findings

Table 5. Descriptive statistics of independent variables

	Mean	Min	Max
DIFFUSED	0.5769231	0	1
PRIVOWN	0.8571429	0	1
ASSETS	418,000,000	869,637	4,070,000,000
TD/TA	0.3685		0.941
SGROWTH	0.0964782	−0.008	1.347
PerceivedRISK	2.296296	1	5
AttitudeRISK	3.333333	1	5
FINSERV	0.2142857	0	1
Age	21.55556	1.5	55
Board_size	6.392857	3	21
n = 76

Source: The study findings

Notes: DIFFUSED—a dummy variable taking the value 1 if no individual shareholder controls more than 20 per cent of the shares of the company, 0 otherwise; PRIVOWN—a dummy which takes a value of 1 if the firm is privately owned and 0 if it is government-owned; ASSETS—total assets (in 2012); TD/TA—total debt/total assets (in 2012); SGROWTH- sales growth over the 2008–2012 periods; Perceived RISK—5-degree Likert type scale, the respondent was asked to indicate whether the company risk is higher than the average company, 1 stands for totally disagree and 5 stands for totally agree; Attitude RISK—5-degree Likert type scale, the respondent was asked whether the company deliberately invests more in competence and external consultancy to secure the financial reporting, 1 stands for totally disagree and 5 for totally agree; FINSERV—a dummy variable taking the value 1 if the company is financial service providing (excepting banks) and 0 otherwise; Age- refers to the age of the firm in business since its establishment; Board size- a variable representing the number of people in the BOD of the firm.

Table 6. Pearson Correlations of the independent variables

	DIFFUSED	PRIVOWN	LnASSETS	TD/TA	SGROWTH	PerceivedRISK	AttitudeRISK
DIFFUSED	1.0000
PRIVOWN	−0.3307***	1.0000
LnASSETS	−0.4781***	0.3689 ***	1.0000
TD/TA	−0.4183***	0.3426***	0.4193***	1.0000
SGROWTH	−0.5578***	0.4216***	0.5632***	0.7474***	1.0000
PerceivedRISK	−0.0419	0.0970	0.1015	−0.0341	0.0286	1.0000
AttitudeRISK	0.0916	0.0404	0.0600	−0.1882	−0.1282	−0.1946	1.0000

Notes: ***p < 0.01

LnASSETS—the natural logarithm of total assets (in 2012);

Source: The study findings

Table 7. Ordinal logistic regressions of internal corporate governance quality on test and control variables

	Coef.	Std. Err.	z
DIFFUSED	−1.149719	1.080748	−1.06
PRIVOWN	−4.776149**	1.966943	−2.43
LnASSETS	0.0000000028**	1.15E-09	2.44
TD/TA	-−6.853075**	3.073636	−2.23
SGROWTH	0.1878591***	0.0696236	2.7
PerceivedRISK	1.77071**	0.7407129	2.39
AttitudeRISK	1.1965***	0.3906017	3.06
FINSERV	19.69551	1292.34	0.02
Age	−0.0743033	0.0685732	−1.08
Board size	−0.0667611	0.1873393	−0.36
Log likelihood	−42.323289
LR chi2(10)	79.44
Pseudo-R2 Number of obs	0.52 76

Notes: * * *p < 0.01, * *p < 0.05, *p < 0.1.

Source: The study findings